If you’re considering filing for bankruptcy, you may be behind on your mortgage payments, have an excessive burden of credit card debt, or have substantial student loans. Student loans were formerly dischargeable under a bankruptcy filing, until the bankruptcy code was changed in 1976. Subsequent modifications to the code further tightened these restrictions, making it difficult for graduates struggling with student loan debt to find relief. Although student loan debt is not dischargeable under most circumstances, your bankruptcy lawyer may be able to accomplish this for you.
Claiming Undue Hardship
Some graduates can discharge their student loan debt under the undue hardship exception. In other words, you’ll need to prove that repaying these debts would cause undue hardship. Your bankruptcy lawyer may recommend claiming undue hardship if your income is very low. Additionally, those with loans for a for-profit trade school may be more likely to be granted a discharge for student loan debt.
Passing the Test
When it comes to granting a student loan discharge, there are variances among the courts. Many courts rely on the Brunner test. To pass the Brunner test, you’ll need to fulfill three requirements. First, you’ll need to prove that you have made a good faith effort to pay your student loan debts. If the court believes that you took out your student loans without intending to repay them, you will not be granted a discharge. Second, you’ll need to prove that, given your current expenses and income, you cannot make ends meet and support your household if you must pay your student loan debts. And third, you need to prove that your current financial situation is likely to persist for the length of the student loan repayment period. Aside from the Brunner test, other courts may use different criteria to determine eligibility for discharge. Your bankruptcy lawyer can help you understand which criteria may be used for you.
The bankruptcy lawyers at Cutler & Associates, Ltd. understand the many intricacies of the U.S. Bankruptcy Code. To learn how filing for bankruptcy will affect your particular situation, schedule a complimentary consultation with one of our attorneys today. If you live in the Chicago area, you can reach our offices in Schaumburg or Aurora by calling (847) 505-0380 or visiting us online.
When you file for a Chapter 13 bankruptcy, the trustee may be able to take your tax refund and apply it to the debt that you owe. Some individuals filing for Chapter 13 bankruptcy include their anticipated tax refund in their income information. In some cases, the repayment plan established by the bankruptcy court may specify that your tax refunds will be turned over to the trustee. Your bankruptcy attorney can help you review the repayment plan and explain anything that appears unclear.
Sometimes, a Chapter 13 trustee will review the repayment plan every year and the plan may be adjusted to include your tax refund, if it did not previously include it. Depending on which district you reside in, you may be able to keep unexpected tax refunds, provided that you are current on your court-ordered payments.
At Cutler & Associates, Ltd., our bankruptcy lawyers will guide you through the process of filing for bankruptcy step-by-step and answer any questions you may have. Residents of the Aurora and Schaumburg areas can contact our law firm at (847) 505-0380 to set up a consultation.
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When filing for bankruptcy, one of the most common concerns people have is with regards to their credit score and credit history. Rebuilding your credit following a bankruptcy is indeed possible; however, it will take patience and consistent money management skills. Start by getting copies of your credit reports and review them for any errors that could affect your score. Then, wait six months after your bankruptcy to apply for a secured credit card at your local credit union or bank.
You can learn more about strengthening your credit after a bankruptcy by watching this video. This financial expert also provides some tips for maintaining paperwork for your bankruptcy and your debts.
If you have other concerns about filing for bankruptcy, consult the friendly team at Cutler & Associates, Ltd. You can reach our law firm in Aurora by calling (847) 505-0380 or read more about filing for bankruptcy on our website.
Mr Cutler and Mr Swanson are fantastic attorneys! I had the pleasure of working directly with Mr Swanson in our Chapter 7 Bankruptcy case. After discussing the case with a few lawyers in the area, I found Mr Swanson to be most intelligent, thoughtful, wanting to listen to our concerns and prompt with responses to questions. Mr Swanson is very...