Student loan debt can be theoretically discharged in bankruptcy, but the standard of hardship you have to prove to have your student loans discharged is extremely high in Georgia. What does this mean? It means that for all practical purposes debt that is properly classified as a student loan cannot be discharged in bankruptcy. Don't despair! There can be other options.
Student Loans vs. Loans obtained from a school or unpaid tuition bill
If a debt is owed as a result of you attending (or attempting to attend), it does not necessarily mean that the debt is classified as a student loan.
Consider the following example: John Doe was accepted into a college and received a tuition bill for $5000.00. John Doe was not able to attend the college and could not cancel his enrollment on time. John Doe did not obtain student loans to pay for the tuition. A month later, the same college sends a bill to John for $5000.00. This debt is not likely to be a student loan and is probably dischargeable in bankruptcy. It is true that the money is owed to a college, but debt owed to a college does not make the debt a student loan. In this scenario, most likely, the debt is just an unpaid bill coming from a college and can be discharged in a bankruptcy.
Here is another example: Jane Doe, while attending college, borrows some money from the University in form of a temporary aid. It is likely that this debt is also not a student loan and can be discharged in bankruptcy.
If you owe student loans and you are considering filing for bankruptcy, consider the following approach.
1. A debt problem is often not limited to student loans.
Usually student loans are part of a more complicated financial status of a person. You may be focused on it since you just received a collector call, or that the sum you have borrowed is much larger than other debts you owe, but keep in mind that the goal of bankruptcy is to improve the overall picture of your financial situation. We need to consider more than just your student loans.
2. Your entire financial information including your student loans should be considered.
In order to figure out if bankruptcy is going to help you, we need to look at the entire picture. Consider the following example: Jane Doe has $52000 in student loans with monthly payments of $425. Jane Doe also has credit cards and the minimum payments for those credit card payments are $483. It is true that Jane Doe cannot get rid of her student loans, but she can get rid of high interest credit cards, freeing up $482 per month to pay her student loans for $425 and have $58 leftover.
This is a very simplistic example, and there are many creative ways to deal with student loans.
A good bankruptcy attorney can help you determine how bankruptcy can help you get rid of as much debt as possible and help you start fresh. If you live in Middle or North Georgia, give us a call for a free consultation.