The Automatic Stay and Student Loans
If you have student loan debt that is being pursued by the creditor when you
file bankruptcy, collection efforts come to a halt due to the automatic stay. This also
ceases collection attempts through bank and wage garnishments. This can
give debtors time to figure out how to repay their loan obligations if
they are unable to get them discharged.
The Brunner Test
It has been said that getting student loan debt eliminated or discharged
in bankruptcy is impossible. There are qualifications determined through
what is known as the Brunner Test to see if you qualify. There are debtors
who may actually meet qualifications but don’t bother to ask about
them. It may be rare but it is possible, but you won’t know for sure
unless you ask your attorney.
The Brunner Test looks at a few aspects such as your ability to pay, current
financial situation and whether you have made good faith intentions toward
making payments. You have to prove that making payments toward the debt
is making things difficult for you when it comes to living needs.
When Does the Automatic Stay Go Into Effect?
automatic stay in bankruptcy goes into effect immediately when your petition is filed.
Creditors, including those you owe student loan payments to, should stop
collection actions against you. As long as your case is pending they cannot
continue to try and collect from you. If you are unable to get student
loan debt discharged, after your case is completed you may still be responsible
for the balance owed. Other unsecured debts may qualify for elimination
making it easier for you to pay your student loans.
Have Any More Questions About Bankruptcy and Student Loans?
If you have any questions you would like answered regarding bankruptcy
and student loans don’t hesitate to
give us a call.