There are more than 44 million Americans who collectively owe $1.5 trillion in student loan debt in the U.S. The average student in the Class of 2016 has $37,172 in student loan debt. One of the most fiercely-debated questions and also one of the most common that potential bankruptcy filers ask is whether student loans are dischargeable in bankruptcy. While the answer is yes, unfortunately, discharging student loans in bankruptcy is an immensely challenging burden in what is already a complex and detailed legal proceeding.
According to research, only 0.1% of student loan borrowers who declare bankruptcy even attempt to discharge their student loans. Of this minuscule number, 40% are successful, which translates to just 0.04% of bankruptcy debtors who sought to have their student loans discharged received either a full or partial discharge. California, Florida, Texas, and New York represent more than 20% of all U.S. student loan borrowers.
Currently, federal law mandates that student loans cannot be discharged in bankruptcy except in certain circumstances that cause “undue hardship” on the borrower or the borrower’s dependents. 11 U.S.C. § 523(a)(8). Based on the efforts of prior debtors, proving undue hardship is extremely difficult, and requires the filing of an adversary proceeding in the bankruptcy case.
There is the tale about a quadriplegic debtor who failed to prove that the burden of paying her student loans was causing an undue hardship, despite the fact that she could not work or be gainfully employed. Thus, the undue hardship required to discharge student loans must be exceptional and extraordinary, to say the least. One judge wrote, “… if Congress ever were to require this writer to instruct a student loan debtor that he or she must carry the burden of proving that he or she has a certainty of hopelessness,’ this writer would retire.” In re Bene, 474 B.R. 56 (Bankr. W.D.N.Y. 2012).
While it is not theoretically impossible, meeting the standard of undue hardship is uncommonly ambitious, challenging, and difficult. If you are in or nearing default on any student loans, consult with an experienced bankruptcy attorney to determine whether it’s even a possibility in your unique situation. If your circumstances include living with a permanent disability or terminal illness, it’s worth considering.
Why should you consider the Morrison Law Group? We are passionate about helping people. The team of attorneys and staff at the Morrison Law Group cares about its clients. We strive for complete client satisfaction. Call 801.456.9933 today to schedule a FREE consultation. We have locations in Ogden, Logan, Sandy, and St. George to serve the residents of the counties of Weber, Cache, Salt Lake, Utah, Morgan, Davis, Washington, and surrounding areas.