The Bankruptcy / Student Loans Relationship Is Rather TrickyStudents and bankruptcy, well, they often go together. However, the same cannot be said about bankruptcy and student loans as these two things do not go together. If anyone thinks otherwise, then he/she is wrong. In fact, the Bankruptcy Student Loans relationship is very tricky. The relationship has seen various stages, at various points of time. In the 70's, the relationship was at an all time high. It was very common among people to attend the school and then file bankruptcy. This way, they used to get rid of their student loans. According to them, this was the sure way to receive free education. With the increase in the number of such cases, the government took a decision to limit this option's availability. After the government's action, it was very difficult to file for bankruptcy, right after finishing the school. Now, the common practice was to wait for at least seven years. This allowed the loan to become old. Now, to file for bankruptcy, a person simply had to prove s/he had made the first payment seven years back. S/he also had to prove the loan was causing some undue hardship. The relationship took a new turn in late 1998. Now, the court said that three criterion had to be met, to file a case and discharge it. This stopped a person from opening a case unless s/he met these criterions. The first criterion is the person, filing the case, must prove to the court his/her inability to keep up with the payment schedule. The second criterion is that s/he has to prove to the court that s/he would be unable to pay in the future. S/he also has to prove that this financial situation is permanent. The final criterion is that the person concerned has made a sincere and good-faith effort to pay back the loan. Only if the person met these entire criterions, s/he could open and file a bankruptcy and student loans case. The student loans guaranteed by a governmental or nongovernmental, profit or nonprofit organization are discharged only if the person, who took the loan, is able to show any Â"undue hardshipÂ". The standards of undue hardship are very hard to meet. Moreover, the different bankruptcy judges across the country apply different standards in such cases. So, someone who has a significant student loan debt, must seek help from a qualified bankruptcy attorney. Such an attorney can explain the standards followed in the specific areas. One thing is pretty clear: the bankruptcy student loans relationship is not rosy at all, because getting rid of student loans, by filing for bankruptcy, is now a thing of the past. Student Loans Consolidation Advice Legal Disclaimer Privacy Policy |