One of the most pervasive myths in Chapter 7 bankruptcy law is that courts never discharge student loans. While there is a higher-clearing standard for the discharge of a student loan versus other types of debt, it may be possible. Let's look at what the standard is and what conditions might allow it.
Undue Hardship
In bankruptcy law, the standard for the discharge of a student loan is mostly centered on the notion of undue hardship.
It's an increasingly common problem. You want to declare bankruptcy, but you're told your expenses are too low. You need to find a way to increase your expenses or decrease your income. What do you do?
Why Are Your Expenses "Too Low"?
When people are in debt, they often reduce their expenses by a lot. Commonly, they move in with their parents so they don't have to pay rent. The problem is that Chapter 7 bankruptcy law determines whether you can reliably pay your debts using your expenses and your income.
The reasons to declare bankruptcy varies from person to person, but many people cite the punitive measures taken by creditors as a prime issue in their decision. It's easy to see why – creditors can make those who don't pay their bills on time pay in many other ways. The phone calls and letters are just the start for some who are in over their heads in debt and sinking lower each day.
If you have decided that you are going to move forward with the process of filing for bankruptcy, then you need to know what the next steps are that you need to take. This will ensure that the process runs as smoothly as possible.
Gather Your Bills
It is vital that you are taking a copy of each one of your bills to your bankruptcy attorney once you retain him or her.
Although you try to do everything you can to keep your finances in check, there are certain things that are out of your control. One of those being when your company decides to start cutting hours or laying people off. What you thought was a consistent paycheck is now thrown out the window and you are left struggling to figure out how to pay your bills each month. Here is where a Chapter 7 bankruptcy might be able to help you regain control of your finances and put you on the path to financial freedom.
