If you want to discharge your student loans through bankruptcy, you need to claim they cause you “undue hardship.” The problem is, no one is sure what that means.
Some people have succeeded in persuading a court they are suffering undue hardship and got their loans dismissed. Yet, generally, the court fails to find they are not. Hence, most people would agree that it is not worth trying because the chances are so low.
Getting a favorable decision might not be the end of it
Two recent success stories soon found the court’s decision was not as final as they hoped. Shortly after the court agreed to discharge their student loans through bankruptcy, the Department of Education intervened to overturn the decision.
Finally, the tables turned back in favor of the two individuals after the Department of Education backed down after a public uproar about its intervention.
So, where does this leave you?
Do you want to spend time and money pinning your hopes on something almost certain to fail and leave you back where you started, only more frustrated and even poorer? Or do you want to do something that will go a long way to solving your problems and has a high chance of success?
If you pass the Chapter 7 means test, you should be able to get a court to discharge debts such as credit cards and personal loans. Get rid of them, and you may then be able to meet your monthly student loan payments.
If you are embroiled in debt you cannot handle, failing to act will only make it worse. The first step to financial freedom is to find out more about your legal options.