Are You Over Your Head In Student Loans?

Many individuals work very hard to obtain advanced education. Unfortunately, student loans can get hefty, placing scholars in significant debt.

The U.S. Department of Education reports that federal student loan default rates are on the rise. During the first two years of student loan repayment periods, 8.8 percent of loan holders defaulted in the 2009 fiscal year. That number rose by 0.3 percent in the 2010 fiscal year.

While it is difficult to discharge student debt through the bankruptcy process, other financial strategies may be available to help you address your educational debt.

Many student loan agreements provide for a postgraduation buffer period, which grants graduates some extra time before their payments become due. After the grace period expires, however, if you are struggling to find a job and make your payments, you should not wait until you are in default to try to work with your lender. It may help to contact your lender as soon as you anticipate serious financial problems. In doing so, you could potentially work out a payment plan. Furthermore, in some circumstances, your lender may be willing to defer payment due dates.

While it is extremely difficult to discharge student debt through a Chapter 7 bankruptcy, it is possible under extreme financial circumstances. To do so, you must show that payment of the debt would impose an "undue hardship" on you and your family.

Courts use varied tests to evaluate on a case-by-case basis whether a particular student has demonstrated an undue hardship. Many courts use the "Brunner test", a 30-year-old U.S. Court of Appeals decision. Under this standard, the petitioner must show all of the following:

  • The debtor cannot maintain a minimal standard of living (based on income and expenses) if forced to repay student loans.
  • Additional circumstances exist that indicate that the debtor's state of affairs is likely to persist for a significant portion of the repayment period.
  • The debtor has made good faith efforts to repay the student loans.

Courts rarely discharge student loans using this test because few individuals meet the test's circumstantial threshold. Even if you cannot prove undue hardship, you still might want to consider repaying your loans through a Chapter 13 bankruptcy plan.

In Chapter 13 reorganization, you may submit to the court a 3- to 5-year plan to repay your creditors over time. Your payment strategy will help you catch up on your debts. If you cannot discharge your student loans, there are still advantages to filing a Chapter 13 bankruptcy.

For example, your Chapter 13 plan as approved by the court will determine the amount of your student loan payments - not your loan holder, so you may pay a lower monthly amount during the plan period. While you work through your repayment plan, collectors cannot take legal action against you.

Many have built up student debt in the quest for higher education, hoping that newly acquired skills will provide the bases for better employment and stable financial futures. Nevertheless, with a struggling economy and difficult job market, it is tough to make ends meet.

If you are drowning in student debt, you may want to speak to a knowledgeable bankruptcy attorney about your current financial situation. A lawyer who has had other clients with excessive student loans can help you establish a solid plan.

Chris Bush

With over 12 years of experience and thousands of cases as a consumer bankruptcy attorney, Chris Bush is on the cutting edge of Bankruptcy and Student Loan Law. Chris can assist you in untangling the options to find the best solution for your specific debt relief case.

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Compassionate. No-nonsense. Great job. Saved me $85K!

I had three choices: two large groups, or DebtDoc. I chose DebtDoc because of their numerous excellent reviews from clients as well as other attorneys. Also, I wanted someone to provide personal service and have a vested interest in my difficult student loan case.

I certainly made the right choice. DebtDoc's attorneys personally answered two of my phone calls and regularly answered my emails, even on one Sunday evening.

After 30 years of student loan "prison", he got me freedom AND he even got the US Dept. of Justice to dismiss 25% of my loans, which saved me $85K.

I feel like I have a new lease on life because of DebtDoc. I wish I could recommend 10 stars.

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To whom it may concern,
DebtDoc's attorneys are extremely knowledgeable with the complexities of Federal Student Loans.
I went from a thriving career to full medical disability, ending with an SSDI placement. Unfortunately, I lost everything and became unable to continue making the student loan payments, so it was in deferment for over five years. When the SSDI settled I tried to negotiate an affordable payment plan with the loan holders but they refused my efforts, instead demanding over twice the amount I could afford.
I contacted DebtDoc and found them to be courteous, responsive and quick to assess my situation. They were sure they could help and took time to answer all questions, which relieved much anxiety. Within months they successfully resolved the debt! With much confidence, I highly recommend DebtDoc.

Clients with Student Loan Debt

Clients with Student Loans

Some information I need to evaluate your Student Loan options is contained in your National Student Loan Data System Report. Instructions for obtaining this report are available on my web site at Simply print/save the reports as a PDF, of all pages. Please DO NOT "DOWNLOAD" THE REPORT from the link - this creates a text file that is very difficult to read; please print the web page as a PDF file - the summary page of all loans AND the individual reports for each loan. Samples of these pages can be viewed by clicking the respective links in the previous sentence. I look forward to reviewing this report with you and assisting you with the management of your Student Loan debt.

I have prepared a brief questionnaire for you to fill out to provide me most of the information I will need. Please click this questionnaire link and provide me with the information listed. I would also like to see copies of your most recent pay stubs or other income information.

My office is located at 2727 Camino Del Rio South, Suite 135, San Diego, CA 92108. The main entrance to the building is on the right/west side. I am on the first floor; when you enter the building, turn right and I’m in the suite at the second door on the left. If the suite door is locked, please call or text at 619-678-1134 and I will let you in. (Unfortunately, I usually can’t hear a knock at that door.) I look forward to meeting with you and assisting you on your path back to financial freedom.