Can student loan debt be discharged in the case of financial hardship? 10 Answers as of February 18, 2011

I am a physician and while I have a decent income 200,000/year I have a huge amount of debt. I have 186,000 in student loan debt, 56,000 in credit card and Line of Credit debt, 10,000 in auto loan debt and I pay about 4300 a month in Child Support. In addition my children live in Canada and I have visitation rights where they stay with me 10 days a month and have about 2200 a month in expenses related to rent and travel to Canada in order to be with them. I basically have no assets, no property. If I can not do something about my debt I may have to stop travelling to Canada and give up my visitation rights which I absolutely do not want to do. Do I have any options?

Ask a Local Attorney. 100% Anonymous. Free Answers.

Free Case Evaluation by a Local Lawyer: Click here
Goodman, Dicus, and Teinert, LLP
Goodman, Dicus, and Teinert, LLP | Scott W. Dicus
A student loan, unlike the other types of debt you mentioned, is not dischargeable unless you can show "undue hardship." To discharge your student loan on the basis of undue hardship, you must file a separate action in the bankruptcy court (a Complaint to Determine Dischargeability of Student Loan) and obtain a court ruling in your favor on this issue.

When determining whether hardship exists, courts use one of two tests (depending on where the court is located). Courts look at either:

1) Poverty (current and future employment), persistence (you must show your current financial situation is likely to continue for a significant part of the repayment period), and good faith (you must prove you'd made a good faith effort to repay the debt) or

2) The totality of the circumstances, which essentially means the court will consider all the facts it deems relevant in deciding whether undue hardship exists. Generally, courts look for reasons to deny student loan discharges.
Answer Applies to: California
Replied: 2/18/2011
Janet A. Lawson Bankruptcy Attorney
Janet A. Lawson Bankruptcy Attorney | Janet Lawson
You may qualify but you need to see a lawyer. You case would would be too complex to answer questions here. Much of the bankruptcy relief is based on exact income and expense numbers.
Answer Applies to: California
Replied: 2/16/2011
William C. Gosnell, Attorney at Law
William C. Gosnell, Attorney at Law | William C. Gosnell
Student loans are now non-dischargeable Hire a lawyer. You should file a Chapter 13 to repay your debts over a 60 month period. This would reconstitute your debts into lower payments.
Answer Applies to: Tennessee
Replied: 2/16/2011
The Shakoori Law Group
The Shakoori Law Group | Rachelle Shakoori
Student loans can be discharged in situations of serious undue hardship. Typically financial hardship alone is not sufficient. I highly recommend that you retain an experienced bankruptcy attorney in your jurisdiction to guide you through the complexities of bankruptcy law and procedure Disclaimer: Please note that this answer does not constitute legal advice, and should not be relied on, since each state has different laws, each situation is fact specific, and it is impossible to evaluate a legal problem without a comprehensive consultation and review of all the facts and documents at issue. This answer does not create an attorney-client relationship.
Answer Applies to: California
Replied: 2/16/2011
Ferguson & Ferguson
Ferguson & Ferguson | Randy W. Ferguson
There is a financial hardship procedure, but it is extremely hard to get done.
Answer Applies to: Alabama
Replied: 2/16/2011
    Judith A. Runyon, Esq. Attorney at Law
    Judith A. Runyon, Esq. Attorney at Law | Judith A. Runyon
    Student Loans are not a dischargeable debt in bankruptcy. You can file a Motion for a hardship discharge of them, but it is extremely unlikely that you would be successful, because you are employed, are not dying, etc. There is a 5 prong test you would have to meet in order for the court to determine you can't pay the debt back.
    Answer Applies to: California
    Replied: 2/16/2011
    Carballo Law Offices
    Carballo Law Offices | Tony E. Carballo
    No. Your ability to make a living has to be impaired permanently, usually due to disability, and you have to go through a long process of trying to pay and make arrangements for payments to the best of your ability. You have to give up all the luxuries. You got your M.D. with student loans and it is only fair that you pay for that unless it is impossible to do that and maintain a minimum living standard. With that kind of income you probably should consider hiring a financial consultant because you have a budgeting problem. Maybe you can talk to a bankruptcy attorney about the possibility of a Chapter 13 to structure your debt. Because of your income you will probably end up making a substantial plan payment over five years but it will give you time to work out thing financially instead of being sued and having your income garnished. Good luck.
    Answer Applies to: California
    Replied: 2/15/2011
    The Law Office of Mark J. Markus
    The Law Office of Mark J. Markus | Mark Markus
    Undue hardship may be granted as to all or part of a student loan obligation. In the Ninth Circuit (which includes California), the test requires you to prove 3 things: 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./ If you think you might qualify, you should consult with a bankruptcy attorney in your area.
    Answer Applies to: California
    Replied: 2/16/2011
    Law Office of L. Paul Zahn
    Law Office of L. Paul Zahn | Paul Zahn
    Your educational loans are generally not dischargeable, nor is your child support obligation. Credit cards and other unsecured debt, however, may be dischargeable. Your number one issue, however, is that you likely do not qualify for a chapter 7 bankruptcy as you are well over the median income. A chapter 13 filing may allow you to get a handle on your debt however, and the court does have authority to convert your chapter 13 to a 7 if it believes it is appropriate to do so.
    Answer Applies to: California
    Replied: 2/16/2011
Click to View More Answers: