South Dakota Student Loan Debt Lawyers

Millions of Americans find themselves shackled with significant student loan debt. Though this type of debt is difficult to discharge via bankruptcy, fairly recent changes to bankruptcy policy have made it slightly more feasible. If you’re considering filing for bankruptcy to help you discharge your student loan debt, please don’t hesitate to contact the skilled South Dakota bankruptcy lawyers here at 605 Bankruptcy for a free initial consultation.

Can Student Loans Be Discharged Through Bankruptcy?

Discharging student loans through bankruptcy is challenging, but it is not impossible. Recent shifts in bankruptcy law and legal precedents have opened the door slightly for borrowers facing severe financial hardship. Generally, student loans are treated differently than other types of debt in bankruptcy and are only discharged if the borrower can demonstrate that repayment would cause undue hardship.

This process typically involves filing an adversary proceeding—a lawsuit within the bankruptcy case—in which the borrower must prove to the court that their circumstances meet strict criteria for undue hardship. While the requirements are demanding, success is achievable with the right legal strategy and representation.

How Do I Prove “Undue Hardship?”

Proving undue hardship is the cornerstone of discharging student loan debt through bankruptcy. Courts often apply the Brunner Test, a three-pronged standard used to determine if repayment imposes an intolerable financial burden on the borrower. To satisfy the Brunner Test, you must demonstrate the following:

• Inability to Maintain a Minimal Standard of Living: You must show that paying your student loans would prevent you from covering basic living expenses, such as housing, food, and healthcare.
• Persistence of Financial Struggles: Your financial difficulties must be ongoing and unlikely to improve over a significant portion of the repayment period.
• Good Faith Effort to Repay: You need to provide evidence that you have made reasonable attempts to repay your loans, such as exploring income-based repayment plans or deferment options before filing for bankruptcy.

Preparing to prove undue hardship requires meticulous documentation, including records of your income, expenses, and efforts to repay. Each case is evaluated on its unique merits, so a strategic approach tailored to your circumstances is critical. Our experienced bankruptcy attorneys can help you build a convincing argument, increasing your chances of success.

Should I File Chapter 7 or Chapter 13 Bankruptcy?

Deciding whether to file for Chapter 7 or Chapter 13 bankruptcy depends on your financial situation and goals regarding student loan debt. Here’s how the two chapters compare:

• Chapter 7 Bankruptcy: Often referred to as “liquidation bankruptcy,” Chapter 7 is generally faster and involves the sale of non-exempt assets to pay off creditors. While student loan discharge through Chapter 7 is rare, it might be a viable option if you can meet the undue hardship standard and have little disposable income.
• Chapter 13 Bankruptcy: Known as “reorganization bankruptcy,” Chapter 13 allows you to establish a court-approved repayment plan to manage your debts over three to five years. While student loans are typically not dischargeable in Chapter 13, filing under this chapter can help you restructure payments and protect you from collection efforts, providing temporary relief while you work toward financial stability.

Choosing the right bankruptcy chapter depends on factors like your income, assets, and whether you aim to discharge or manage your student loan debt.

Contact Our Student Loan Debt Lawyers

Here at 605 Bankruptcy, we understand just how challenging it can be to grapple with extensive student loan debt. This is why we are dedicated to representing college and university graduates struggling with debt as we take them through the bankruptcy process. Contact our skilled student loan debt lawyers for a free case evaluation today.