New Way to Discharge Student Loan Debt in Bankruptcy

Posted on Jun 06, 2013

student loan debtA May 2013 court ruling made it possible for a former student to discharge his student loan debt by declaring bankruptcy.

If you are considering filing bankruptcy in North Carolina you may think all your debts will be cleared. However, there are nondischargable debts. Nondischargable debts may include court fines, penalties, spousal and child support, student loans, debts associated with personal injury claims as a result of driving while intoxicated in a motor vehicle accident, and some taxes. These nondischargable debts are very similar for both Chapter 7 and Chapter 13 bankruptcy, but there are some differences that our bankruptcy lawyers in Raleigh and Fayetteville can explain in a free consultation.

Student loans, like the other nondischargable debts noted above, are nondischargable unless you are able to prove extenuating circumstances. A recent court ruling in regards to a former law student's bankruptcy claim addressed this issue. The former law student, Michael Hedlund, tried to get a job as an attorney after graduating law school, but after failing the bar exam multiple times, he ended up taking a job as a counselor where his salary was not able to cover living expenses and an $800 monthly student loan payment.

Hedlund tried to consolidate his loans, but adminstrative errors out of his control made it impossible to do so. He defaulted on his loans and his wages were garnished as a result.

Hedlund then filed for bankruptcy as a last resort.

The court found in May 2013 that Hedlund made every effort possible to pay down his debts and they discharged the remaining balance of over $32,000 of student loan debt in his name.

Bankrupcty lawyers in Raleigh with Brent Adams & Associates educate clients about new cases like the one above, as well as pending legislation that may help their bankruptcy case. We offer no-cost consultations that you can schedule by calling 877-BRENT-ADAMS or filling out a form here.

Read More About New Way to Discharge Student Loan Debt in Bankruptcy...