If you’re facing overwhelming student loan debt, you might wonder if there’s anything you can do to get out from under it. Indeed, student loans usually are not dischargeable under Chapter 7 bankruptcy, but there are options available to help you in certain circumstances.
A student loan debt attorney can help you decide if going through bankruptcy is a good option for you or whether another method of debt relief is right for your situation.
Will Chapter 7 Help with Student Loans?
The short answer: Chapter 7 bankruptcy does not automatically discharge your student loans. Some private student loans are dischargeable if they meet certain requirements or you qualify for an undue hardship; and, federal student loans can be dischargeable if you qualify for an undue hardship.
However, student loans are among the few debts that usually can’t automatically be discharged under Chapter 7.
Are There Exceptions?
To have your student loans discharged, you can file a complaint to determine their dischargeability, which initiates what’s known as an adversary proceeding.
You and an attorney must attempt to prove your financial hardship by showing that you cannot afford to pay back the amount of your loan due to circumstances beyond your control.
In Minnesota, the court uses the Totality of the Circumstances test. The other test is called the Brunner test, which Minnesota bankruptcy courts do not follow.
The Brunner test is a three-pronged test that looks at your income and expenses to determine if you can pay back your student loans while maintaining a minimal standard of living.
The Brunner test requires that:
- The debtor must show a specific inability to pay
- The debtor must demonstrate that he or she has made good faith efforts to repay the loans
- The debtor’s situation is unlikely to change shortly
When determining dischargeaility, the Totality-of-Circumstances test looks at all circumstances surrounding your case, including your expenses and monthly income.
Generally, the court will look at the following:
- Your monthly income
- Your expenses (including housing, food, medical care, transportation, and other necessary items)
- A comparison of your income to the amount you are paying on your student loans
- Whether any extraordinary circumstances can be used as a basis for discharge
Contact a Minnesota Student Loan Debt Relief Attorney
Getting your student loan debt discharged is a difficult process. However, it’s not impossible. If you’re struggling under the weight of your student loan debt and want to know whether it can be discharged, contact a Minnesota student loan debt relief attorney at Hoverson Law Offices, P.A. to discuss your options.
Our team has extensive experience helping clients resolve their debts through bankruptcy and other relief options so they can start over fresh. Call us at (612) 349-2728 or fill out our contact form for more information.
We target Minneapolis, Bloomington, and the surrounding Minnesota communities.