The costs of higher education have skyrocketed over the years, and it is likely that if you went to college in Kentucky you had to fund at least some if not all of your education through student loans. However, in these tough economic times you may find that you are unable to repay your student loans, causing you to suffer the stress of collection actions. You may wonder if you can file for bankruptcy to have your student loans discharged. While it is difficult to have student loans discharged through bankruptcy, it is not necessarily impossible.
To discharge your student loans, along with a Chapter 7 or Chapter 13 bankruptcy filing, you will also have to file an “adversary proceeding” with the bankruptcy court stating that your would suffer undue hardship if forced to repay your student loans.
Factors courts may consider
There is not a single test that the court will use to decide whether you will be subjected to undue hardship if forced to repay your student loans. However, the following factors may be considered.
Courts may consider whether you will be unable to keep up a minimal standard of living if you had to repay your student loans. Courts may also examine evidence demonstrating that such hardships will go on for a significant amount of time within the loan repayment period. Finally, courts may consider whether you had previously made a good faith effort to pay back your loan prior to filing for bankruptcy.
Outcomes of adversary proceedings
There are several outcomes that may come if you file an adversary proceeding to have your student loans discharged and are at least partially successful.
First, the court may order that the loan be fully discharged, meaning you no longer need to make payments and any collection activities must cease.
Alternatively, the court may decide that only part of your student loans can be discharged. This means that you will have to pay back at least some, but not all of your student loans.
The court may also determine that you still have to pay back the entirety of your student loans, but the court may alter the terms of the repayment, for example, by applying a lower interest rate.
Seek advice with your adversary proceeding
Ultimately, this post does not contain legal advice and cannot guarantee any outcome in an adversary proceeding. Adversary proceedings and bankruptcy filings can be complicated, and with so much at stake, you may not want to try to handle them alone. Bankruptcy attorneys in the Bowling Green area may be a useful resource to those who are unable to pay back their student loans.