Student Loan Debt
Although student loan debts can be financially burdensome, they are generally not dischargeable in bankruptcy. Filing for Chapter 13 bankruptcy, however, can offer a way for you to make your student loan payments affordable. At Anidjar & Levine, our Hollywood bankruptcy lawyers advise people considering bankruptcy about its impact on student loan debt. We can explain how you can potentially use Chapter 13 to make your student loan payments more manageable.Chapter 13 and Student Loan Debt in Florida
Student loan debt is one of the most common types of debt that individuals take on, and it can be difficult to manage in any economy. If you have accumulated other debt, it may be challenging to keep up with your student loan payments. Once you stop making payments and default on your loans, the consequences can lead to even more financial hardship. Your lenders can garnish your wages, and the amount you owe may be deducted from your tax refund. Your loans will continue to accrue interest, and you may incur penalties for missing payments.
A Chapter 13 bankruptcy may provide you with some financial relief that can make it easier for you to make your student loan payments. Student loan debt is largely non-dischargeable. Unlike dischargeable debt, such as credit cards, you will have to pay off non-dischargeable debt even after you file for Chapter 13 bankruptcy protection. In other words, you will still be responsible for paying your student loans even after you file for bankruptcy.
What Chapter 13 can do is make it easier for you to make your student loan payments. Chapter 13 allows you to:
- Lower your monthly student loan payment to an amount you can afford;
- Stop wage garnishment and the accrual of penalties; and
- Reduce your overall debt to make paying your student loans more affordable in the short and long term.
While it may not eliminate your student loan debt, Chapter 13 may make the debt less burdensome. Under very narrow circumstances, it may be possible to discharge your student loan debt, but you would have to prove that repayment would pose an undue hardship.Undue Hardship Test
In very rare cases, a bankruptcy court may discharge student loan debt if it considers the debt an “undue hardship.” In Florida, a student loan debt may be discharged in bankruptcy if it imposes an undue hardship on the debtor and his or her dependents. To prove the student loan debt is an undue hardship, you would have to show that:
- By paying the loan, you cannot maintain a minimal standard of living for yourself and your dependents;
- There are enough circumstances to indicate this situation will last for a major portion of your repayment period; and
- You have made good-faith efforts to repay the loans.
You can reorganize your debt under Chapter 13 and propose a repayment plan that includes a discharge of student loan debt, but you must initiate a separate proceeding for a bankruptcy court to determine whether paying your student loan debt would be an undue hardship.Experienced Bankruptcy Lawyers Serving Fort Lauderdale
The Fort Lauderdale bankruptcy attorneys at Anidjar & Levine provide individualized counseling to South Florida residents regarding Chapter 13 and its impact on student loan debt. Our attorneys will review your particular financial situation, discuss your goals with you, and provide the guidance you need if you decide to proceed with filing for bankruptcy. We can discuss other bankruptcy alternatives that may be available to you so you can make an informed decision on how to reduce or eliminate your debt while protecting your assets. Call us today at (800) 747-FREE or complete our online form to schedule a free initial consultation with one of our attorneys.