Can I file for bankruptcy because I cannot pay my student loans? 5 Answers as of October 19, 2010

I have more than $50,000 in private student loans that I cannot pay back. I cannot defer any longer because I am not in school anymore. I only work part time and cannot keep up with the minimum payments. Is bankruptcy an option?

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Law Office of Barbara Seeley Curtis
Law Office of Barbara Seeley Curtis | Barbara Curtis
No, you cannot.
Answer Applies to: Florida
Replied: 10/19/2010
Builders Law Group
Builders Law Group | Nick Campbell
Even private student loans are non-dischargeable unless you can prove "substantial hardship" as that term is legally defined. Sometimes, and in some jurisdictions, they may discharge some of the loan and require you to pay the balance depending on your financial situation. It is not easy to do and you must initiate an adversary proceeding against the lender in the bankruptcy to get a resolution.
Answer Applies to: California
Replied: 10/19/2010
Greifendorff Law Offices, PC
Greifendorff Law Offices, PC | Christine Wilton
Congress is considering passing a bill that would allow private student loans to be discharged in bankruptcy, but it is not law yet. As of today, you cannot discharge student loans in bankruptcy.
Answer Applies to: California
Replied: 10/19/2010
The Law Office of Mark J. Markus
The Law Office of Mark J. Markus | Mark Markus
Student loans are generally not dischargeable in bankruptcy unless you can prove, after trial, "undue hardship" as that term is defined by the courts in your district. In the 9th Circuit (which includes California) this test, known as the "Brunner Test", requires that you prove the following:

1.that you cannot maintain, based on current income and expenses, a 'minimal' standard of living for yourself and your dependents if forced to repay the loans;
This is usually the easiest prong to satisfy.

2. that additional circumstances exist indicating that this state of financial affairs is likely to persist for a significant portion of the repayment period of the student loans; and,

3. that you made good faith effort to repay the loans.

This does not just include making payments on the loans. It requires doing things over time such as making efforts to increase your income (which includes going back to school to get additional degrees or experience), consolidating loans with the Direct Loan Servicing Center, and other similar efforts.
Answer Applies to: California
Replied: 10/18/2010
Diefer Law Group, P.C.
Diefer Law Group, P.C. | Abel Fernandez
Student loans are not dischargeable in a bankruptcy.
Answer Applies to: California
Replied: 10/18/2010
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