Student Loans and Proving Hardship
Proving that student loans have become an undue hardship is for most people very difficult in bankruptcy.
Below are a few things that could get in your way when asking for an undue hardship student loan discharge in bankruptcy:
- Failing to get a job which pays a decent wage based on your education and/or skills. The bankruptcy court will not look favorably upon an undue hardship plea for discharging your student loans if it appears that you have artificially deflated your wages by failing to seek work that pays what someone with you skills and educational background should earn.
- If you are married or have a common law spouse who supports you financially and you have income, the bankruptcy court may not view payment of the student loans as an undue hardship.
- You have been paying on your student loans for a long time; but have a history of quitting or getting fired from jobs which allowed you to at least make some payments on your student loans.
- You have failed to apply for the income contingent repayment plan through your student loan lender if it is a federal loan. The bankruptcy courts seem to be taking into consideration income contingent repayment plans when debtors request an undue hardship discharge of their student loans. Also, the bankruptcy court will not consider the tax consequences of having a loan forgiven under the income contingent repayment plan when considering whether or not to grant an undue hardship student loan discharge in bankruptcy.
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