Although higher education is available nationwide, not everyone can afford its inherent costs. Some families cannot afford to buy books and to pay for things like living costs, fees, tuition and other expenses. That’s why many families turn to student loans to provide the much needed financial aid. Student loans are easily available and have become an integral part of higher education in the US.
However, even though student loans are considered non-priority unsecured debt, they are not easily discharged when filing for bankruptcy. This is due to the fact that unlike many other loans, student loans are backed by the federal government. Additionally, the funds are obtained more easily than with other types of loans. Because of the laws limiting how federally supported student loans are discharged, it might be difficult to do so when filing for bankruptcy, especially without appropriate representation from a respectable bankruptcy attorney in Escondido.
Discharging Student Loans
The only way student loans can be discharged when filing for bankruptcy is if the person filing for bankruptcy can prove they suffered from an undue hardship. This was determined by the congress in order to avoid abuse from debtors who take a student loan and file for bankruptcy or other forms of bankruptcy frauds. This is what differentiates student loans from loans people take out to fund a car, house or another asset. These loans are much easier to deal with than student loans.
However, the problem arises from the fact that the term “undue hardship” is not clearly defined. In fact, each of the thirteen different federal appellate courts defines the term differently. There are two different tests developed by different appellate courts that help determine if the specific case falls under this category.
Undue Hardship Tests
The first test is also the one most courts across the US use, known as the Brenner test. According to this test, the person filing for bankruptcy must first prove that they cannot afford the minimum standard of living based on their family earnings. Furthermore, that person must also prove that the situation is not likely to change in the near future. Finally, they must prove that they are willing to pay their loans through past efforts.
The other test, used less frequently, determines if a person can have their student loan discharged according to three factors: their financial past, present and future, their living expenses and miscellaneous circumstances. If the debtor can prove all three factors amount to an undue hardship, their student loan might get discharged.
Work With the Best Bankruptcy Attorney in Escondido
Now you have a better understanding of what makes student loans so specific. Using either of these tests, the Supreme Court can determine if the person filing for bankruptcy is doing so because of an undue hardship and choose to discharge the loan. Additionally, the high court may use neither of these tests but a new one, more specific to the case. Either way, student loans are still an exception to the rule and are not treated the same as any other type of loan.
If you believe you have a strong case to get your student loan discharged, don’t let your case rejected due to bad representation. If you are looking for a respectable bankruptcy attorney in Escondido reach out to Bankruptcy Lawyers Chang & Diamond, APC for a free initial consultation at (619) 312-4900.