Student debt is a major economic and social issue in America. More than 40 million borrowers collectively owe over $1.6 trillion in federal student loans, and if you fall into this category of borrowers, you are sure to feel the impact.
Having student loans discharged with help from an attorney has been a major and ongoing topic in the news. From legal settlements and court battles over forgiveness programs to mass debt cancellations, there is a lot to learn. Keep reading to find out what it means to have your student loans discharged.
Federal Student Loan Discharges
Having your student loans discharged means you are permanently relieved of your obligation to repay the remaining balance. In Minnesota, you do not have to repay a loan if it is discharged through specific federal administrative programs. One common pathway is called borrower defense. You may be able to discharge your student loans if your school misled you or engaged in illegal misconduct, or if it closed while you were enrolled or shortly after you withdrew.
You may also qualify for student loan discharge if you are determined to be totally and permanently disabled through a Total and Permanent Disability discharge. If you can no longer engage in substantial gainful activity due to a medical or physical condition, this program will cancel your eligible federal student loans. However, private student loans generally do not qualify under this program.
Can You Discharge Your Student Loans Through Bankruptcy?
Not everyone qualifies to have their student loans discharged under federal administrative programs. However, there are other steps you can take, including filing for bankruptcy. Federal guidelines allow for the discharge of student loans if you can prove undue hardship. However, this discharge method requires filing a formal adversary proceeding in bankruptcy court.
Minnesota generally uses the Totality of the Circumstances Test to determine whether you, as a borrower, qualify to have your student loans discharged. It is used to demonstrate that you cannot maintain a minimal standard of living if forced to make student loan payments and that your financial difficulties are likely to continue for a significant portion of the repayment period. Nevertheless, you must demonstrate that you have made reasonable attempts to settle the loan before seeking bankruptcy relief.
Talk With Us About What It Means to Discharge Your Student Loans
Walker & Walker Law Offices, PLLC are your Minneapolis bankruptcy lawyers. We provide the guidance and legal protection you need during this financially stressful time. Get help by reaching out to our firm today, because filing for bankruptcy is often the responsible choice.
Our initial consultations are always free, so do not delay your peace of mind. Learn more about what it means to have your student loans discharged and what we can do through the appropriate legal process.