Before anyone would be declared eligible for a student loan discharge, he or she should be able to prove that paying back those loans would cause him or her to face undue hardship. However, the meaning of undue hardship can vary from one person to another so the way a bankruptcy court would evaluate your own case might be through the use of a brunner test. All courts do not make use of this test but being prepared for the brunner test means you are ready if necessary. Welcome to our how to prove undue hardship for student loan guide.
There are several setbacks that comes with filing for bankruptcy so make sure that you end up thinking about it twice before you go ahead to declare it. It is also very complicated to file for bankruptcy and in this case, hiring a lawyer that specializes in bankruptcy is the right step to take. Entering the chapter 13 or chapter 7 bankruptcy is the best way that anyone can get to qualify for a student loan discharge. In some states, you might also be required to complete a credit counseling course and getting a certificate before registering.
Filing for a separate action which is referred to as adversary proceedings is also another way that one can get to qualify for a student loan discharge. Then your request gets submitted to the bankruptcy court and it shows that you and your family would face undue hardship if you end up paying back the loans that you collected. One thing you should know is that submitting the request doesn’t mean the court would pass a verdict in your favor because your loan servicers and creditors have the power to contest your claim.
This is why getting well prepared before your hearing is such a critical thing to do and that is why you really need a lawyer that is specialized in student loan discharge and filing for bankruptcy on your team.
How To Prove Undue Hardship For Student Loan
There is no easy method to expressing the hardship and stress that paying for student loans might cause and the best way to prove that paying for student loans would cause undue hardship is by making use of the three points we have mentioned of the brunner test. The Brunner test is actually a good method to make use of as it would help in building up your case but it is not used in all courts. If you are able to gather the three points proof then you’ll need to file separate petition during the bankruptcy proceeding.
You should be able to prove that you cannot maintain a minimum standard of living and the excellent place to start from is through financial proof, paychecks and bank statements. You should also be able to prove that your financial crisis has been going on for a while before filing for bankruptcy and this is bankruptcy isn’t a short term problem. The last thing involved is providing records on payment of your student loan as well as communications between you and your servicer.
You would also need the help of a lawyer on your team that would help you during your court case and hearings. No one said paying back your student loans would be an easy thing to do but if they are properly managed then it can be to your own advantage as it would help in building up your credit score. If you have a high credit score then you would be recognized as a credible borrower. If you are able to win the case of proving that repaying student loan would cause you to face undue hardship then;
- All of your loans would be discharged and you would no longer be owing any debt
- You might have a specific portion of your loans eliminated but might have to pay up the rest
- You are responsible for paying the full or entire amount but this time with lower rates
Another option that you might have is having the court take away all of your debts apart from the student loans in bankruptcy. In this case, you would need to pay up the rest of the loan balance. If this happens then what you must do is contact your loan servicer and both of you can sit and discuss an alternative payment plan and this plan would also be helpful in getting you back on your feet.