In today’s society many students are faced with the uncertainty of landing a job right
after graduation--in addition to that, students are weighed down by student loan debt.
There is an option if you find yourself having difficulty paying back your student loan.
Chapter 13, also known as “The Wage Earner’s Plan,” develops a plan for you to pay
back debt over a period of time.
Most Bankruptcy courts rely on a test called “The Brunner Test,” in order to determine whether a student loan is dischargeable in bankruptcy. However, in Minnesota the less restrictive "totality of the circumstances" test is used. The way the courts evaluate the loan’s dischargeability comes down to whether you have shown “an undue hardship.” The “totality of the circumstances” test requires that the debtor not be able to maintain the minimal standard of living if forced to repay the loans. The court can look at all relevant considerations, including:
(1) your past and present financial resources, and those that you can reasonably rely on for the future;
(2) your reasonably necessary living expenses for you and the your dependents; and
(3) “any other relevant facts and circumstances surrounding each particular bankruptcy case
It helps to get a hardship discharge if you have tried to make payments on the student loans. If you or your children have chronic medical problems or mental health problems, this will be taken into consideration.
Once you file for bankruptcy, you are automatically protected against creditors. They can’t collect from you until the courts give them permission to do so.
There is an idea that higher education leads to financial success, however most people will feel the economic strain for years to come.
After filing for Chapter 13 bankruptcy, you will have a plan for repayment. Usually repayment is based on current and future income. A Chapter 13 plan is for 3 to 5 years. For help with a Chapter 13 bankruptcy plan, consult Minnesota Bankruptcy Attorney Gregory J. Wald.
Most Bankruptcy courts rely on a test called “The Brunner Test,” in order to determine whether a student loan is dischargeable in bankruptcy. However, in Minnesota the less restrictive "totality of the circumstances" test is used. The way the courts evaluate the loan’s dischargeability comes down to whether you have shown “an undue hardship.” The “totality of the circumstances” test requires that the debtor not be able to maintain the minimal standard of living if forced to repay the loans. The court can look at all relevant considerations, including:
(1) your past and present financial resources, and those that you can reasonably rely on for the future;
(2) your reasonably necessary living expenses for you and the your dependents; and
(3) “any other relevant facts and circumstances surrounding each particular bankruptcy case
It helps to get a hardship discharge if you have tried to make payments on the student loans. If you or your children have chronic medical problems or mental health problems, this will be taken into consideration.
Once you file for bankruptcy, you are automatically protected against creditors. They can’t collect from you until the courts give them permission to do so.
There is an idea that higher education leads to financial success, however most people will feel the economic strain for years to come.
After filing for Chapter 13 bankruptcy, you will have a plan for repayment. Usually repayment is based on current and future income. A Chapter 13 plan is for 3 to 5 years. For help with a Chapter 13 bankruptcy plan, consult Minnesota Bankruptcy Attorney Gregory J. Wald.
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