Student Loan Assistance from a Bankruptcy Attorney in Mooresville NC

Generally, student loans cannot be discharged when a debtor files for bankruptcy, because it is not allowed under current law. However, as with other areas of law, there are some exceptions to the rule. In Section 523(a)(8) of the US Bankruptcy Code, these exceptions are listed; Lake Law Office, PLLC will explain them in the article below.

 

Exceptions to the “No Discharge of Student Loans” Rule

 

Student loan debt can be discharged during a bankruptcy if it is not guaranteed or insured by the government. It can be discharged if the loan was not made through a nonprofit or government-funded program. Most students’ loans are issued through the USDOE at a competitive interest rate, so they do not meet this exception. A private loan issued through a bank does not meet this requirement because most banks are FDIC-insured. Your Bankruptcy Attorney in Mooresville NC can tell you more about North Carolina’s bankruptcy laws.

 

A student loan can be discharged if continued payment will place an undue hardship on a debtor and his/her dependents. US bankruptcy law assumes that it is hard to repay a loan after school is finished, especially if a student has a low-paying job (or none at all). This criterion is applied on a per-case basis; a death in the family or a terminal disease may satisfy the requirement. The application of this rule is dependent largely upon the debtor’s bankruptcy court, and upon the existence of a bankruptcy attorney at Lake Law Office PLLC of Mooresville NC.

 

If an Exception is Met, is the Debt Discharged Automatically?

 

The short answer is “no”. Even if a debtor can satisfy one of the above exceptions, the discharge process is not automatic. In some areas, the debtor must file an adversary proceeding in bankruptcy court. This litigation is much like a trial for a bankruptcy case, and its purpose is to get the debt discharged by court order. Procedures for student loan discharge vary by location, because precedents and judicial opinions vary as well.

 

If you or a person in your family needs to know more about student loan discharge during a bankruptcy proceeding, it is best to call a Bankruptcy Attorney at The Lake Law Office, PLLC right away. A lawyer can help you file the necessary paperwork on time, and they can represent you in court if the need arises.

 

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