Can a person in Franklin County Ohio file bankruptcy to get rid of student loans?

Most people believe that you can’t get rid of student loans by declaring bankruptcy in Franklin County. That may be true most of the time, but a skilled bankruptcy lawyer may be able to help you find some relief from your loan payments. This might be possible if your student loan payments would impose an undue hardship on you and your dependents. Since the U.S. Bankruptcy Code doesn’t explicitly define “undue hardship,” different judges and jurisdictions interpret hardship differently and take things on a case-by-case basis.

You can only get relief from your student loans if you make an effort to pay them off or erase them, so only about 0.1 percent of student loan debtors who file for bankruptcy attempt to have them discharged. However, judges grant a hardship discharge to nearly 40 percent of debtors who seek it.

In other words, it may be worth your time to file for bankruptcy and attempt to find relief from your student loans. It can be a long and difficult process, but here’s how to go about it in the state of Ohio.

Proving Undue Harship

The first step in seeking student loan debt relief is to prove undue hardship. Most courts use the “Brunner” test to determine whether or not you’re able to repay your debt. To pass the test, you need to have made a good-faith effort to repay your loans, be unable to maintain a minimal standard of living if you’re forced to make payments, and show that additional circumstances exist that could prevent you from paying on your loans.

Some courts have considered holding student loans to a different standard than other debts and may use other criteria when deciding to provide relief from them. College has gotten significantly more expensive, and more debtors are having difficulty paying off their student loans. Bills have been introduced that would allow courts to treat student loans the same as other debts, which could make it easier to have them discharged in the future.

If you can prove undue hardship, your student loans may be completely canceled. Even if you cannot prove undue hardship, filing for bankruptcy will protect you from collection actions until the case is resolved, which should buy you some breathing room. You may also get relief if you file for a Chapter 13 bankruptcy plan that will allow you to repay your debt affordably over a period of three to five years. If you successfully complete this payment plan, some or all of your debts may be discharged. Even if they aren’t, you will likely owe significantly less than you once did.

It may also be easier to prove hardship if you have private loans since private lenders might not accept plans for lower payments. There are more repayment options for federal loans, so it may be harder to pass the Brunner test. On the other hand, if something happens that makes it all but impossible to pay back federal loans, you may still be able to prove hardship and have those loans dismissed.

Overall, declaring bankruptcy to get rid of student loans is difficult, but not impossible. If this is something you would like to pursue, we at Wood & Brewer, LLC would be happy to meet with you to discuss your options. Contact us today for more information.