Discharging Student Loans
Young adults typically go to college to improve their lives. Not only do they seek higher education and to expand their knowledge, but they often seek training for certain careers. Unfortunately, not everyone who finishes college lands their dream job. In some cases, students suffer injuries and disabilities that prevent them from working in the field of their dreams.
Not advancing in their career can have a devastating impact on the quality of life for young adults. Unfortunately, student loan companies are not sympathetic to the struggles of young Americans. Instead, they call repeatedly, send out threatening letters, and even garnish wages and tax returns from students. In some cases, debtors may consider bankruptcies to rid themselves of student loans and start over fresh.
As a general rule, people are unable to discharge their student loans through bankruptcy proceedings. Although the majority of debtors are unable to discharge these expenses, it is important to recognize that there are few exceptions that allow debtors to discharge student loans if they are able to demonstrate that they qualify to do so.
Working with a knowledgeable bankruptcy attorney in Vermont will provide you with the best chances of discharging your student loans in bankruptcy so you can move on with a fresh financial start.
Discharging Student Loans, A Hardship Discharge
Debtors are able to discharge their student loans if they are able to prove that they meet the hardship requirements for discharges. Unfortunately, for most, this is a difficult standard to meet. This level requires debtors to show that they maintain a minimal standard of living. Furthermore, they must prove that their standard of living is unlikely to improve over time.
The Test of “In Re: Brunner”
The hardship standards test is outlined in the case of In Re: Brunner (Brunner v. New York State Higher Education Services Corp.), 831 F.2d 395(2d Cir. 1987). This case specifies various criteria that a debtor must meet in order to qualify to discharge their student loan debts. These standards require a debtor to prove the following:
- His or her current income is presently at a minimal standard that prevents them from being able to pay back the student loan
- Circumstances such as health problems or a type of disability will cause this state of affairs to persist for a significant portion of the loan repayment
- The debtor has made a good faith effort to repay the loans at some point in the past
These standards were elaborated on in the unpublished opinions of Vezina v. Sallie Mae. In summary, a debtor must prove that their income prevents them from being able to pay back the student loans. They must successfully demonstrate that their current level of income and expenses do not allow them a minimal standard of living should they be forced to repay the loan.
To prove the future prospects test, or that their circumstances will prevent their financial status from improving, the debtor must present uncontroverted evidence that establishes a medical condition or a disability that prevents them from engaging in further employment. Furthermore, they must show that their condition is not likely to improve. Debtors who are able to prove that each of these elements exists may be able to have their student loan debt discharged in a bankruptcy.
How We Can Help You
With over 150-years of combined experience, the law offices of Kohn Rath Danon . & Scharf, LLP have helped countless people restructure their debts, discharge their student loans, and move forward in a more peaceful manner. We aim to stop harassing calls from student loan companies and help students discharge their loans whenever possible. Contact our law firm today at (802) 482-2905 to explore legal options available for you.