Odenville, AL—The bankruptcy court typically does not allow student loans to be discharged. However, an individual might qualify to have some or all of their federal student loan debt discharged in bankruptcy if they meet certain criteria. Generally, if a person does qualify to have their federal student loan debt discharged, they would need to file a separate action called an “adversary proceeding.”1
When filing an adversary proceeding, a debtor is essentially saying that paying back the loan would “impose an undue hardship on [them] and [their] dependents” and therefore, they are requesting to have it discharged. An Odenville, AL bankruptcy attorney can use a person’s current circumstances to determine the likelihood of them being granted their request.
Other Ways to Get a Handle on Student Loan Debt
If an individual has student loan debt that cannot be discharged in bankruptcy, there may be other options worth looking into. For instance, some individuals might qualify to have their student loans forgiven or even canceled.
If an individual was employed by a government or not-for-profit organization, they may qualify to have their loan forgiven under the Public Service Loan Forgiveness (PSLF) Program, according to the U.S. Federal Student Aid website. Those who work for five consecutive years in a qualifying school may be eligible to have up to $17,500 of their Direct Loan or FFEL Program Loan forgiven.
When student loan debt can’t be forgiven or canceled, what then?
In the event an individual does not qualify to have their student loans canceled, forgiven, or discharged, they might want to contact their lender to see if they can modify their repayment plan or request a hardship deferral.
Generally, if a person can show they are facing financial hardship, their lender may grant them a hardship deferral which would allow them to stop paying for a specified period of time. Of course, when a student loan is placed on hardship deferral, it usually doesn’t stop interest from accruing. Therefore, individuals who are considering this as an option need to be aware that their balance will increase while they aren’t making payments.
Still have bankruptcy-related questions?
Anyone who is facing financial hardship and has accrued a substantial amount in debt may want to schedule an initial consultation with an Odenville, AL bankruptcy attorney. A lawyer can review the options that are available to them and decide if they are a good candidate for filing for bankruptcy.
To connect with a bankruptcy law firm in Alabama now, contact Hill, Gossett, Kemp & Hufford, P.C. at (205) 640-2000.
Disclaimer: No representation is made that quality of legal services provided is greater than the quality of legal services provided by other attorneys.
Hill, Gossett, Kemp & Hufford, P.C. can be reached at:
2603 Moody Parkway, Suite 200
Moody, Alabama 35004
Phone: (205) 640-2000
7900 Parkway Drive
Leeds, AL 35094
Phone: (205) 699-5500
6441 U.S. Highway 11
Springville, Alabama 35146
Phone: (205) 467-2225