Student Loan Debt and Bankruptcy

How an Orlando Bankruptcy Attorney Can Lift The Weight of Student Loans

Millions of Americans are struggling under the weight of crushing student loan debt. It feels like no matter how hard you work, you can’t get ahead. You might even be considering bankruptcy as a way out.

But before you take that leap, it’s important to understand: filing for bankruptcy with student loan debt is a complex process, and it’s not always as straightforward as you might think.

Quick Summary:

  • Challenges in Discharging Student Loans:
    • Bankruptcy can help with various debts, but discharging student loans is trickier.
    • Only government-backed loans qualify under the “undue hardship” rule; private loans are harder to discharge.
  • Proving Undue Hardship – The Brunner Standard:
    • The Brunner standard in Florida involves proving inability to maintain a minimal standard of living, persistence of financial hardship, and good-faith efforts at repayment.
    • Detailed evidence of income, expenses, health issues, and repayment attempts is crucial.
  • Options If Discharge Isn’t Possible:
    • Explore alternatives such as income-based plans, loan forgiveness, lower interest rates, temporary relief, and loan simplification.
    • Tailored solutions based on income, family size, and job circumstances.
  • Adversary Proceeding:
    • Filing an adversary proceeding involves a mini-trial within bankruptcy to prove undue hardship.
    • Initiating the process is possible for both Chapter 7 and Chapter 13 bankruptcy, even in old Chapter 7 cases.
  • Bankruptcy Basics – Choosing Your Path:
    • Understand Chapter 7 (“Fresh Start”) and Chapter 13 (“Payment Plan”) bankruptcy options.
    • File necessary paperwork, go through a meeting of creditors, and experience different endings for each chapter.

Can I File for Bankruptcy with Student Loans?

While bankruptcy can help with other debts, getting rid of student loans through it is much trickier. 

Imagine a judge asking: “Would paying back these loans make it really, really hard for you to live a normal life?” Just saying “yes” isn’t enough. You need super strong proof that shows it’s practically impossible. This is known as “undue hardship.

Can I Discharge Any Student Loan in Bankruptcy?

Not all student loans are equal. Only government-backed loans fall under the undue hardship rule. Private loans are much harder to get rid of in bankruptcy.

How Do I Prove Undue Hardship?

Gather everything you can to show:

  • How much money you earn and spend each month (think paycheck and bills).
  • Where you live and if anything makes it hard to work (like health issues).
  • What you’ve already tried to repay your loans (like income-driven plans).

What is the Brunner Standard?

In Florida, there’s a special test called the Brunner standard that you have to pass to get rid of student loans in bankruptcy. It’s like a three-part hurdle:

  • Inability to Maintain Minimal Standard of Living: Can you only afford the bare minimum to live by, like food, shelter, and basic clothes, even after paying your loans? This means showing your judge your income, expenses, and how much you’re left with after paying your loans.
  • Persistence of Financial Hardship: Will things stay this way for a long time? Do you have a health condition or other issues that make it unlikely you’ll earn more in the future? Think of evidence that shows this isn’t a temporary struggle.
  • Good Faith Efforts at Repayment: Have you tried your best to repay your loans so far? Did you use income-driven repayment plans or other options? Show the judge you’re not trying to avoid your debt, but it’s simply impossible to manage.

What If My Student Loan Debt Can’t Be Discharged?

Facing the reality that your student debt might not qualify for discharge in bankruptcy can be disheartening. But remember, it’s not the end of the road.

Here are some options:

  • Income-Based Plans: Pay what you can afford based on your income and family size. We’ll find the right plan for you.
  • Loan Forgiveness: Work in public service? Become a teacher? Certain jobs can get your loans forgiven after a while. We’ll check if you qualify.
  • Lower Interest Rates: Let’s see if we can get you a better deal on your loan interest.
  • Temporary Relief: Facing hardship? We can explore options to pause or reduce payments for a while. While deferment and forbearance shouldn’t be long-term solutions, they can provide temporary relief.
  • Simplification: In some cases, consolidating your loans or refinancing at a lower interest rate could simplify management and potentially lower your payments

What is an Adversary Proceeding?

You need to file an adversary proceeding, like a mini-trial within your bankruptcy case, where you argue your case directly to the judge. Think of it as convincing them that paying these loans back would make your life truly unbearable.

Here’s how it works:

Step 1: Launching the Fight:

  • It all starts with a Complaint, a document outlining your reasons for seeking an “undue hardship discharge” or a discharge for “unqualified education loans” under Section 523(a)(8) of the Bankruptcy Code.
  • This Complaint needs to be served on all lenders holding your student loans, notifying them of your legal challenge.
  • Remember, you can initiate this process whether you’re filing for Chapter 7 or Chapter 13 bankruptcy, and even if you have an old Chapter 7 case, reopening it’s possible if you have new grounds for discharge.

Step 2: Gathering Evidence (Discovery):

Both you and the loan company have the right to gather information (discovery) to support your respective cases.

  • Expect inquiries from the loan company about your past and present employment, job applications, income, and any medical conditions affecting your earning potential.
  • Be prepared to share relevant documents and potentially answer questions under oath (deposition), along with your medical provider if necessary.

Step 3: Building Your Case:

While gathering evidence is crucial, presenting it effectively holds equal weight. Consider these potential tactics:

  • Medical testimony: If your case hinges on a medical condition impacting your work, expert medical testimony can strengthen your argument.
  • Documenting your efforts: Showcase any attempts you’ve made to repay your loans (income-driven plans, hardship programs) to demonstrate good faith and financial hardship.

How Does Bankruptcy Work?

Feeling trapped with no escape? Bankruptcy might seem like a distant dream, but understanding it doesn’t have to be rocket science. Let’s break it down in simple terms:

  1. Choosing Your Path: Imagine you’re in a video game and have to pick a level. Bankruptcy has different “chapters” depending on your situation. The two main ones are:
    • Chapter 7: The “Fresh Start” Chapter: Think of it like wiping your debt slate clean. This might involve selling some belongings, but most of your debt gets erased – poof, like magic!
    • Chapter 13: The “Payment Plan” Chapter: This is like training for a financial marathon. You make manageable payments for 3-5 years, often with lower interest, until you’re debt-free and feeling like a financial champion.
  2. File Paperwork: Before starting, you need to gather information: list your debts, your stuff, and your income. Think of it as packing your financial backpack for the journey.
  3. Hitting Pause: Filing for bankruptcy is like hitting the pause button on debt collection. No more scary calls or letters from loan sharks – take a deep breath and chill!
  4. Meeting of Creditors: Answer questions about your finances and show them you’re playing by the rules.
  5. Different Paths, Different Endings: Chapter 7 might involve selling some things to erase your debt, while Chapter 13 requires sticking to your payment plan.
  6. The Happy Ending: After the dust settles, it’s like starting a new adventure with a clean financial slate. Rebuild your credit score and step into the future without the burden of overwhelming debt holding you back.

Why Do I Need an Orlando Bankruptcy Attorney?

Feeling overwhelmed by debt and considering bankruptcy? While filing yourself might seem cheaper, remember: Orlando bankruptcy laws are tricky, and mistakes can cost you big. Here’s why having a lawyer on your side is crucial:

Going it alone is risky:

  • Missing key steps: Bankruptcy forms and deadlines are complex. Messing up can delay your case or even get it dismissed.
  • Limited options: A lawyer knows all your debt relief options, not just bankruptcy. They might find a better solution!
  • Hurting your future: Bankruptcy affects your credit and finances. A lawyer helps minimize the damage and get you back on track.
  • Facing creditors alone: Talking to creditors and judges is tough. A lawyer protects your rights and fights for you in court.

So, how to find the right lawyer?

  • Orlando experience: They know the local courts and laws inside-out.
  • Student loan knowledge: If you have student loans, find someone who can handle them in bankruptcy.
  • Clear and available: You deserve to understand what’s happening. Ask questions and get answers easily.
  • Fair fees and payments: Know the costs upfront and find a payment plan that works for you.
  • Happy clients: Check online reviews to see what past clients say about their experience.

Call our Orlando Bankruptcy Attorney Now!

Navigating legal issues, especially those surrounding debt and finance, can be overwhelming and confusing. At Tejes Law, we understand the complexities of Florida bankruptcy law and the anxieties it can cause. Here’s how we can help:

Our Qualifications:

  • Experienced: Attorney Joshua Tejes has been practicing bankruptcy and civil litigation since 2008, representing both individuals and creditors in hundreds of cases.
  • Focused: We offer assistance in Chapter 7 and Chapter 13 bankruptcies, ensuring in-depth knowledge in this specific area.
  • Client-Centered: We are committed to providing excellent customer service, taking the time to understand your unique situation and guide you through each step with compassion and clarity.
  • Award-Winning: Our dedication has been recognized through awards like the Clients’ Choice Award 2019 and Top Contributor Award 2012.
  • Local Knowledge: We serve clients across Central Florida, including Brevard, Orange, Osceola, Lake, Polk, Seminole, and Volusia counties, understanding the nuances of local courts and procedures.

Facing these challenges? We can help with:

  • Feeling buried under debt: Exploring bankruptcy options like Chapter 7 or Chapter 13 to find the best solution for your specific situation.
  • Overwhelmed by creditors: Negotiating with creditors on your behalf and protecting your rights throughout the process.
  • Confused about your legal options: Offering clear explanations and guidance on all available debt relief options, not just bankruptcy.
  • Unsure about the future: Helping you manage your finances and rebuild your credit post-bankruptcy for a brighter tomorrow.

Don’t wait any longer. Take control of your financial future.

Contact Tejes Law today for a free consultation. We’ll listen to your concerns, answer your questions, and explore the best path forward for you. Together, we can find a solution to overcome your financial challenges and achieve peace of mind.

Sidebar Form