What constitutes undue hardship?
When it comes to filing for bankruptcy to avoid repaying government student loans, borrowers must show that continuing to repay a loan would cause undue hardship. In Circuit 11, we have what is commonly known as the Brunner Test.
Outside of the Bankruptcy Courts, a person may also qualify to have their student loans discharged. The Department of Education has a set of criteria that constitute what really is an undue hardship and who is eligible for this type of relief.
If you are considering filing for bankruptcy, it is important that you speak with an experienced bankruptcy attorney who is also experienced with student loan terms. Before you meet with your lawyer, here are some of the things you may want to discuss further.
Definition of undue hardship
According to the Department of Education, these are the criteria for declaring undue hardship in connection with student loans and bankruptcy.
- Veterans who have been deemed by the Department of Veterans Affairs to be unable to find employment as a result of a service-connected injury.
- Whether or not a borrower’s health has changed significantly since the original loan amount was determined.
- Whether or not a borrower has tried to pursue other loan terms, including income-sensitive repayment. If you are trying to claim undue hardship but have not attempted to declare an income-sensitive payment or reach an agreement on any other loan terms with your lender, a lender may not accept an undue hardship claim.
- Whether or not a debtor filed for bankruptcy due to circumstances beyond their control, and whether or not those circumstances will affect the debtor’s ability to repay a loan.
There are many other factors that go into determining whether an undue hardship claim will be accepted as grounds for federal student loan relief. Rather than try to argue this claim on your own, it is best to speak with a qualified attorney today to determine whether or not he can make this claim and how you can defend this position.
Definition of undue hardship
As it stands, Congress has not technically defined what “undue hardship” is. As such, it is often up to the federal courts to determine whether or not this claim is valid. To determine the validity of such a claim, the court system uses two different methods to weigh the criteria. These methods are often complicated and contain a number of different factors. Essentially, it is up to you (the borrower) to prove that you cannot repay a loan without going bankrupt, which is not easy to do.
While it may seem like filing for undue hardship after bankruptcy is the fastest and best way to avoid paying back a federal student loan, this is not the case. Most of the time, it is difficult to make this claim stand, and lenders challenge every case that is filed. So how can you avoid paying a federal student loan if you have no choice but to file for bankruptcy? Talk to a bankruptcy attorney today to see what your options are and make sure you have the right attorney on your side when it comes to fighting your claim in court.