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Dicharging student loans through Chapter 7

College students across the country deal with challenging debt loads when they leave academia and enter the working world. Indeed, student debt is a major issue for politicians and educators alike. It is generally accepted that student loans cannot be discharged through a Chapter 7 bankruptcy filing, but Kentucky students may be buoyed to learn that in some instances, student debt is in fact eligible for discharge.

In order to circumvent the statutes put in place by the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, a student considering a Chapter 7 bankruptcy would have to prove the student loan specifically was causing what is called "undue hardship." In order to prove this, the filer must first document that he or she is unable to maintain a minimal standard of living, individually or for any dependents based on one's current income and expenses. The individual must also prove this situation is not likely to change significantly.

Finally, a "good faith effort" must have been made to repay the loan. Obviously, given the subjective nature of some of these stipulations, proving undue hardship is not easy. It is also important to remember that anyone attempting to prove undue hardship will be subjected to intense scrutiny in terms of one's budget. If the court deems a filer's spending habits frivolous, for example, the case for undue hardship could be dismissed.

Debt of any sort can be challenging and at times even stressful for the individual or family shouldering it. This is particularly true for recent Kentucky graduates with student loans, who are entering the working world with no small amount of existing debt. Those in particularly difficult situations could benefit from the support of a bankruptcy attorney in determining whether they may be eligible for the discharge of student debt if they choose to file for Chapter 7.

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Law Office of Ginger C. Cord, PSC
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Lexington, KY 40507

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