One question that many students and parents who are feeling the weight of student debt have is whether student loans can be discharged through bankruptcy. It is important to know that they are not. Student loans are becoming the biggest financial issue for most middle-class American families today. Students are graduating with fewer job prospects and greater amounts of debt. Since the financial crisis has ended, most families have resolved their mortgages, have gotten out of foreclosure, have maybe refinanced their mortgages or gotten loan modifications. However, student loans are at the highest rates in history, and many parents will co-sign student loans for their children. Because the economy has not gotten better, their children may be underemployed when they graduate from college or graduate school, and the parents will be liable to make payments on these student loans.
Unfortunately, the Bankruptcy Code is enacted by Congress and amended by Congress. As long as Congress has had Republican majorities, they have not changed the student loan laws in the Bankruptcy Code. However, certain judges in New York are starting to carve away at the student loans wall and bankruptcy. For example, if a judge can find that the debtor’s student loan is not financed by the government, or is really a contract between the university and the student itself, then certain bankruptcy judges determine that this is just a contract debt, like any other contract debt, and may be dischargeable. The best thing for you to do is speak with a bankruptcy attorney. Make sure he or she knows and understands how student loans are impacted in your bankruptcy case, so that you can plan your bankruptcy case and know which debts will be discharged, and which debts won’t be discharged.
If you are facing overwhelming debt, contact an experienced bankruptcy attorney who can guide you towards a successful resolution.
If you are in a difficult financial situation and require the services of an experienced bankruptcy attorney, contact the Law Offices of Allen A. Kolber, Esq. today to schedule a consultation and discuss your options.