Top Things to Consider About Student Loans and Bankruptcy

Anyone who is considering the possibility of filing for consumer bankruptcy in light of the new guidance from the Biden administration and the U.S. Department of Justice should learn more about what is involved in the process of seeking a discharge of student loan debt in bankruptcy. You should get in touch with one of our Oak Park bankruptcy attorneys to find out more about having student loans discharged in bankruptcy given your particular circumstances. In the meantime, the following are some of the top things for you to consider about student loans and bankruptcy.

New Guidance Has Been Issued

As we noted above, new guidance on discharging student loans in bankruptcy has been issued. Specifically, the new guidance addresses the process for a debtor to seek to have student loans discharged, and the process by which the Department of Justice and Department of Education will determine the debtor’s eligibility for a discharge. Most significantly, the process will now involve an “attestation form,” which is a 15-page form that the debtor will fill out. The attestation form will require the debtor to supply detailed information about their current and future financial situation, and their history of attempted student loan repayment.

Undue Hardship Requirement is Still in Place

The new guidance has not changed the undue hardship requirement that the debtor must meet under U.S. bankruptcy law. Instead, it has changed the process by which the Department of Justice and Department of Education, and the bankruptcy court, will determine whether the debtor has met that requirement. Specifically, the information contained in the attestation form will provide evidence that the debtor has met the undue hardship requirement.

Time Will Tell if the New Guidance is Effective

While the new guidance suggests that the process for having student loans discharged in bankruptcy will be easier, it is important to keep in mind that the new guidance was announced in November 2022, and the attestation form used to determine whether a debtor meets the undue hardship requirement was revised by the Biden administration in February 2023. Accordingly, it may take some time before we can determine with certainty whether the new guidance has been effective in allowing more debtors to have their student loans discharged in bankruptcy.

Contact an Oak Park Bankruptcy Lawyer Today

Now that there is a new process in place for discharging student loans in consumer bankruptcy cases, it is likely that many more Americans will begin to consider the possibility of a bankruptcy filing in order to have their student loans discharged. You should keep in mind that while you still need to meet the undue hardship requirement that has been necessary for a discharge in previous bankruptcy cases, actually showing that you meet that requirement will now be much easier. Whether you are just considering bankruptcy and have questions, or you feel like you are ready to file, you should get in touch with one of the experienced Oak Park consumer bankruptcy attorneys at our firm. Contact the Emerson Law Firm to learn more about how we can assist you.



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