Student loans saddle many college and professional graduates with heavy debt that can persist for years. Since well-paying employment is not a guarantee for the well-educated, student loan debt can be a major factor in pushing people into a financial crisis. Unfortunately, there is a limited ability to wipe out these loans through bankruptcy. Ordinarily, student loans are nondischargeable, meaning that they will survive even when you have completed the bankruptcy process.

Fortunately, there is an important exception to this general rule. If you have filed for bankruptcy protection, you may obtain a discharge of a student debt if you prove that the debt imposes an undue hardship on you.

In deciding if you are entitled to an undue hardship discharge, the judge will consider three factors:

• Whether repaying the loan will cause you to fall below a minimal standard of living, as determined by your financial circumstances
• Whether you will be unable to improve your financial situation enough to cure the hardship
• Whether you made a good faith effort to repay the loan before you filed for bankruptcy

Depending on whether and how much of a hardship is found to exist, the court may discharge the entire student loan, discharge a portion of the student loan or require you to continue paying the entire student loan but on terms more favorable to you.

The lender or other holder of the loan will likely oppose your request, and you will bear a significant burden of proof to convince the judge to grant you the relief you want. An experienced bankruptcy attorney can make the best case possible, given the facts and circumstances.

Due to the scale of the student debt problem nationwide, legislation is in the works that might make it easier to have student loans discharged. The bipartisan Fresh Start Through Bankruptcy Act, currently pending in the U.S. Senate, proposes to allow discharge of federally backed student loans on which the borrowers made payments for at least 10 years before filing for bankruptcy.

The Law Offices of James C. Zimmerman has the experience and knowledge to maximize your chances of obtaining a student loan hardship discharge in bankruptcy. Call us at 973-764-1633 or contact us online to schedule a free consultation at any of our five offices in northern New Jersey, conveniently located in Vernon, Wayne, Pompton Lakes, Hackensack and Nutley.