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Bankruptcy May Be Your Option

Discharging student loans during bankruptcy

There is much said about the cost of education these days. Many people who pursue a higher degree often leave college with a large amount of student loan debt. While many people in Oklahoma may have the misconception that student loan debt cannot be discharged through bankruptcy, this is not necessarily true. This debt could be discharged under certain circumstances.

Some professionals with knowledge of such legal action feel that people who carry such debt and pursue bankruptcy often do not attempt to have student loan debt discharged. Some reports indicate that as much as 40 percent of cases seeking for a discharge are successful. However, only 1 percent of those pursuing bankruptcy protection who have student loans seek action to have them discharged.

When faced with a request to discharge student loans, judges often use the Brunner test. Under this test, a judge must determine whether a person's future holds an amount of hopelessness in regards to the debt. To be successful, a debtor must prove that he or she faces financial hardships that will continue for a large portion of the repayment period and that efforts to repay the loan will render maintaining the person's standard of living impossible. Additionally, the debtor must show that he or she has attempted to repay the debt.

While those working toward a college degree often have a great deal of hope for the future, there are often circumstances beyond their control that can prevent them from achieving their goals. In some instances, a person suffers a disability preventing them from entering or returning to the workforce, for example. Because the average person in Oklahoma likely has little experience with bankruptcy proceedings, there are experienced professionals who can help explain the process and provide guidance throughout.

Source: U.S. News & World Report, "Discharge of Student Debt Possible During Bankruptcy", Farran Powell, April 27, 2016

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