Drowning in student debt? Don’t lose hope! Filing for bankruptcy might offer a path to relief. In 2022, new government guidelines made it easier to discharge some federal student loans through Chapter 7 and Chapter 13 bankruptcy. These guidelines clarified the “undue hardship” standard required for discharge, which was further simplified in 2023.
Before, getting rid of student loans with bankruptcy was nearly impossible. But now, there’s a ray of hope. This process is called an “adversary discharge”. You go to court and convince the judge that paying those loans back would cause you real hardship. Think of it like proving you simply can’t afford to pay them and live a normal life at the same time.
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What's an Adversary Discharge?
It’s like a mini-lawsuit inside your bankruptcy against your student loan company. But you can only file it once you’ve already started a bankruptcy case. Convince the judge that paying back your loans would cause “undue hardship,” meaning it’s impossible to meet your basic needs and handle those payments at the same time. Win the case, and those loans are gone!
Qualifying Criteria:
Right now, your income and expenses simply don't add up. You can't afford food, housing, and other essentials, let alone student loan payments.
This isn't a temporary blip. Your financial situation isn't likely to improve significantly anytime soon, making sustained repayment unrealistic.
You've already explored all your options, like deferment programs and income-driven plans. You've tried everything you can to manage this debt responsibly.
Let's Tackle Your Student Loans Together!
We’re experts at adversary discharges and here to fight for your financial freedom. We’ll:
- Check Your Case: Assess your situation to see if you qualify for an adversary discharge.
- Build Your Case: We gather all the evidence to prove your hardship.
- Do the Paperwork: Forget legal mumbo-jumbo, we handle all the forms and filings.
- Talk to Your Lenders: Negotiate with the government on your behalf.
- Fight in Court (If Needed): Stand by your side in court and fight for you.
What Makes Student Loan Cases Different?
A Student Loan Adversary significantly differs from conventional bankruptcy proceedings. While your bankruptcy falls under either Chapter 7 or Chapter 13 of the Bankruptcy Code, the Student Loan case operates under a less familiar subsection of those chapters, namely 11 U.S.C. 523(a)(8)(B). In a straightforward case, the following documents are commonly filed:
Adversary Complaint: Launching your case requires filing the Adversary Complaint, a formal, two-to-three-page document presenting your argument for student loan discharge based on “undue hardship.” Clearly identify your student loan servicers and explain why, for you and any dependents, repaying these loans would constitute extreme hardship. Include specific details like income, assets, expenses, and bills to build a compelling picture of your financial struggles.
Student Loan Dischargeability Attestation: Once your case is filed, an Assistant United States Attorney will assess your eligibility for eliminating student loans. This adversary attestation, a comprehensive 30+ page document, details your financial situation, encompassing education history, current income, student loan balances, and household expenses. This submission serves as your demonstration to the Court that repaying the loans is financially unfeasible.
Stipulation and Non-Opposition to Discharge: If your financial documents meet the criteria, the Assistant US Attorney will acknowledge that repaying your student loans would impose an unreasonable financial burden. Consequently, your attorney will execute a document affirming the government’s non-opposition to the discharge, essentially conceding the point. This process culminates in the expungement of your student loans through bankruptcy, providing you with a resolution free from debt obligations.
Discharging Private Student Loans
The process for discharging private student loans in bankruptcy varies significantly from one case to another and differs markedly from the approach to federally backed loans. Unlike federal loans, the adversary attestation process related to undue hardship is non-existent for private student loans. The response from a specific lender to a lawsuit can vary widely. In some cases, lenders may be willing to negotiate or waive certain debts if the facts of your case are favorable.
Thankfully, there are other avenues to pursue the discharge of private student loans in bankruptcy. One approach is to dispute the classification of your loans as educational. If your private student loan amount greatly exceeded your tuition costs, if the funds were used primarily for non-educational expenses, or if your educational institution was not accredited by the Department of Education, you may be able to challenge the non-dischargeability of these debts.
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Dial 312-493-6912 to speak directly with Steven J. Grace.
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Common Questions
Can I File The Adversary Myself, Or Do I Need A Lawyer?
Student loan adversary discharges are a powerful tool, but navigating this complex and evolving legal landscape requires expert guidance. Hiring an attorney is crucial for maximizing your chances of success and protecting your future. Remember, you have only one shot at a Chapter 7 discharge every eight years. A denied student loan adversary could significantly hinder your finances. Don’t gamble with your future. Trust Steven Grace Law to craft a winning strategy for your student loan adversary discharge.
Are There Types Of Student Loans That Can't Be Discharged?
While only federal student loans qualify for adversary discharge under new guidelines, a successful discharge on those loans can sometimes spark negotiations with private lenders. They may be more willing to work with you to avoid similar outcomes. Remember, exploring all options, including potential private loan settlements, is crucial with an experienced attorney.
Can I File For Discharge If I Am Current on My Student Loans?
Whether you can have your student loans discharged depends heavily on your individual situation. While proving “undue hardship” is the key to getting those loans forgiven, it’s not a simple task. Making your student loan payments on time can actually work against you, as it shows financial stability. However, being enrolled in deferment, an income-driven repayment plan like Income-Based Repayment (IBR), or a Pay As You Earn (PAYE) plan can help build a case for discharge with the right legal expertise.
What Happens If My Adversary Gets Denied?
While aiming for total student loan discharge in an adversary proceeding is ideal, know that success can come in different forms. Even if not all your Department of Education debt is wiped clean, partial discharges are a possibility. This area offers varying degrees of success, and a skilled attorney can help you navigate the process to maximize the outcome.
