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Student loan debt and the undue hardship requirement, P.3

We've been looking in recent posts about the issue of discharging student loan debt in bankruptcy. We've already spoken briefly about how courts determine whether undue hardship is appropriate. Generally speaking, as we've noted, it is very difficult for a bankrupt graduate to satisfy the undue hardship standard.

This fact is evidence in cases such as this one, in which a woman who was earning only about $10,000 per year was unable to have $37,000 of student loan debt discharged because she didn't make a good faith effort to repay those loans because she failed to look into loan consolidation and repayment plan options. 

As some readers may be aware, federal student loans may be paid back on an income-based repayment plan, but for debtors who are seriously financially strapped and who have significant student loan debt, even paying off loan interest on a monthly basis can be challenging. Other undue hardship cases show that, while it isn't impossible to discharge student loan debt in bankruptcy, it is very difficult.

Graduates who are financially desperate enough to consider the possibility of bankruptcy may not necessarily be able to have their student loan debt discharged, but discharge of other debts may make all the difference in being able to get back on one's feet. The decision to file for bankruptcy should never be taken lightly, of course, and it is important to consult with an experienced bankruptcy attorney before filing, not only to determine one's options, but to ensure that the filing is done correctly and any problems that arise in the course of the bankruptcy case are effectively handled.

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