Student Loans Often Remain Following Bankruptcy
One question many former students have when considering filing for bankruptcy is how their student loans will be handled. In a majority of cases, student loans for college are not dischargeable under bankruptcy rules established in 1998.
Too many students had taken out an exorbitant amount of loans for school and between graduation and starting to work would file for bankruptcy, eliminating the need to repay the loans. While bankruptcy probably will not eliminate the need for repayment of college loans it may help ease the new graduates debt load, enabling them to make their payments without exhausting their finances.
There are three areas a bankruptcy court will consider if student loans are part of a bankruptcy filing. In order to be relieved of the responsibility, the person will have to show that paying the loan will create an undue hardship on the individual, meaning that if forced to pay they cannot maintain even a minimum standard of living. The second point is that if the time for which the student has to repay the loan will stretch over a significant time. The last point on which the court will...
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