When it comes to declaring bankruptcy to avoid paying off government student loans, borrowers must prove that continuing to pay the loans would cause undue hardship. In the Eleventh Circuit, we have what is commonly known as the Bruner Test.
Outside of bankruptcy courts, a person may also qualify for a discharge of their student loans. The Department of Education has a set of criteria that determine what exactly constitutes undue hardship, and who is eligible for this type of relief.
If you are considering bankruptcy, it is important to speak with an experienced bankruptcy attorney who also has experience with student loan terms. Before meeting with your attorney, here are some things you may want to discuss further.
definition of undue hardship
Here are the criteria for declaring undue hardship with respect to student loans and bankruptcy, according to the Department of Education.
- Ex-servicemen who have been deemed by the Department to be unable to find employment as a result of a service related injury.
- Whether the health of the borrower has changed significantly since the original loan amount was determined.
- Whether a borrower has attempted to comply with other loan terms, including income sensitive repayment. If you are attempting to claim undue hardship, but have not attempted to declare income sensitive repayment or reach agreement with your lender on any other loan terms, the lender may not accept the undue hardship claim.
- whether or not the debtor has filed for bankruptcy due to circumstances beyond its control, and whether those circumstances would affect the debtor’s ability to repay the debt.
There are many other factors that go into determining whether an undue hardship claim will be accepted as a reason for federal student loan relief. Rather than trying to argue this claim on your own, it is best to speak with a qualified attorney today to determine whether you can make this claim and how you can defend this position. .
define undue hardship
As it stands, Congress has not technically defined what “undue hardship” is. Thus, it is often the decision of the federal courts to determine whether the claim is valid. To determine the validity of such a claim, the court system uses two different methods of weighing the criteria. These methods are often difficult and involve many different factors. Essentially, it is up to you (the borrower) to prove that you cannot repay the loan without putting yourself in financial ruin – no easy task to do.
While it may seem like claiming undue hardship after bankruptcy is the best and fastest way to pay off federal student loans, this is not the case. Most of the time, this claim is difficult to maintain, and lenders contest every case brought up. How can you avoid paying federal student loans if you have no other option but to declare bankruptcy? Talk to a bankruptcy attorney today to see what your options are, and make sure you have the right attorney when it comes to fighting your claim in court.