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What can I do about my student loans?

by David Leibowitz, Illinois and Wisconsin Bankruptcy Attorney · Posted in *Bankruptcy Information, Featured

Student loans are becoming more and more troublesome. People essentially mortgage their lives when they take out student loans. Student loans are not dischargeable in bankruptcy. Let’s say that again. Unless you can prove substantial hardship under the very difficult Brunner test, you won’t be able to discharge your student loans in bankruptcy.

Let’s go over the Brunner test. To prove the substantial hardship you need to file a suit against the lender who made your student loan. In that suit, you’ll have to prove:

If forced to repay the loans, the debtor could not maintain a minimal standard of living for himself and his dependents
Circumstances show that this state of affairs is likely to continue for a very long time
Debtor has made good faith efforts to repay the loans

This is a very difficult standard. You may have a better chance to deal with your student loans in chapter 13. There you have the opportunity to include your student loans within your plan. You might be able to concentrate on paying the student loans under your chapter 13 plans while paying relatively little on your other debt.

Outside of bankruptcy, another option which now is available is called Income Based Repayment plan. This is a program offered by the Department of Education and is only for government student loans. Information about this is available here.

About David Leibowitz, Illinois and Wisconsin Bankruptcy Attorney

David Leibowitz holds a B. A. in Economics from Northwestern University and received his J.D., cum laude, from Loyola University of Chicago School of Law where he also served as Note Editor of the law review. Admitted to the Illinois and Wisconsin bars, he is the managing member of Lakelaw, an interstate law firm with offices in Chicago, Skokie and Waukegan in Illinois and Kenosha, Wisconsin. He is nationally recognized for his work in identifying and pursuing mortgage related claims in the context of bankruptcy. David is a member of both the Illinois and Wisconsin bars and has practiced in bankruptcy courts throughout the country. He is a member of the American Bankruptcy Institute where he is the Co-Chair of the Commercial Fraud Committee. He is ta frequent contributor to the ABI Journal and speaker at ABI events. He is an author and editor in chief of the American Bankruptcy Institute Fraud Manual published in 2010. He is also a member and Director of the National Association of Bankruptcy Trustees, a member and frequent speaker for the National Association of Consumer Bankruptcy Attorneys and numerous state and local bar associations. He is Board Certified by the American Board of Certification in both Consumer Bankruptcy Law and Business Bankruptcy Law. David is also the publisher of Lakeblawg, www.lakelaw.com/lakeblawg, a blog dedicated to consumer and small business bankruptcy and mortgage foreclosure defense.