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Student loan debt may, rarely, be discharged

When New Mexico citizens face financial challenges or some type of unexpected life changes, life can become very difficult very quickly. Many people have little or no savings, and unpaid bills begin to accumulate with not much chance to dig out of the financial deficit. Bankruptcy may be contemplated if the source of the debt is, for example, medical bills or credit card debt, but some debts are not dischargeable such as child support or government fines. Student debt has rapidly become almost a national epidemic, and although it is rare, under certain circumstances, it may be included in a bankruptcy proceeding.

Student loan debt in this country currently exceeds $1.5 trillion, and there are no signs that number will do anything but continue to grow. At one time, student loan debt was like other debt and fully dischargeable. That changed beginning in 1976, and for the next 30 years it became harder and harder to discharge student loans. Now, no student loan, either federally backed or private, can be discharged without a showing of 'undue hardship," a very high standard.

A debtor must prove that every effort was made to pay the debt, the individual cannot maintain a decent standard of living because of the debt and the financial problems are unlikely to go away turning the period of repayment. Additionally, those filing for Chapter 13 cannot include student loan only those filing Chapter 7. The bottom line is that bankruptcy judges are none too quick to let student loans become extinguished in bankruptcy.

For any reasons, an individual may qualify for the fresh start a bankruptcy may potentially allow. A bankruptcy lawyer can make that assessment on a case by case basis and make certain the strict filling requirements are adhered to.

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