Millions of people in the USA borrow and pay student loans every year. It is one of the most common loans in America. While this loan is important to ensure a good education for a good future, paying back such a huge amount can be overwhelming. If you have trouble paying back your loans, it is important to know your options.
You may have heard that bankruptcy does not discharge student loans. However, that is only a myth. Discharging your student loan can be challenging, but it is certainly possible with the help of an experienced bankruptcy lawyer in Katy. Contact them today to understand the eligibility criterion.
Should you file for Bankruptcy?
If you face difficulty paying for your student loan every month, you may need some financial relief. However, bankruptcy is not the only way to do that. There are several other options, including negotiating the terms of the loan payment with the provider. An attorney can help you understand your options. However, if those do not work for you, you may have no option but to file for bankruptcy. Bankruptcy is often kept as a last resort.
Does Chapter 7 cover Student Loans?
Indeed, filing for bankruptcy in chapter 7 can help provide relief from paying student loan debts. However, one must not forget that the bar for quality is quite high. In order to qualify for a student loan discharge, you will need to prove that paying would cause an “undue hardship.” There is no legal definition of what is considered undue hardship, which can make it difficult to predict whether your loans will get discharged.
On the other hand, not having a specific definition of undue hardship makes it flexible for the judges to understand different situations. To qualify for chapter 7 bankruptcy in Katy, you need to fulfill the following three criteria.
- You are unable to buy the basic necessities for yourself because of paying for the student loan.
- This financial condition is likely to continue throughout the payment period.
- You have tried your best to repay your debt before filing for bankruptcy.
Even when you meet all the criteria, the decision still remains in the hands of the court.
Alternatives to Bankruptcy to Get Relief from Student Loan
As stated in the beginning, you can try various other options before filing for bankruptcy. Here are some you may consider.
- Private loan services sometimes have flexible payment options.
- You can adjust your payments according to your income by applying for an income-based plan in federal loans.
- Apply for federal loan rehabilitation.
