student-loan-bankruptcyGoing to college is a very expensive endeavor. It is the reason why the majority of students who go to college end up having to get a student loan. These loans have to be paid off in a timely manner, or you will suffer the consequences of collections. Many consider bankruptcy as an alternative to paying off the student loans. While this is an option, you really need to know how the process works before you begin the process of discharging your debt.

How the Seven-Year Rule Is Missed

It used to be that the standard in American bankruptcy was the seven-year rule. This is the rule which states any loan that has not been active for seven years after the individual ceases to be a full-time student will not be discharged through bankruptcy proceedings. Federal or provincial laws may have further stipulations on what is considered to be a full or part-time student, as well as what the date you ceased to be such would be.

If you were able to wait until you hit the seven-year mark, you could file bankruptcy on your student loans. Unfortunately, these laws have been abolished and every student is required to pay their student loans unless a hardship can be proven to the court.

Hardship Provision

The court can make an exception to discharging your student loans if there is an undue hardship created by the student loan. In order to ask the court to consider you for this ruling, you will need to prove a few things.

If you are looking to use the hardship provision, you will need to make sure you have satisfied the courts in two different areas. You will need to demonstrate you have:

  • Made every effort to repay your student loans in accordance with the repayment requirements.
  • Experienced a financial hardship which shows no signs of stopping any time soon which will prevent you from having the ability to repay your student loans in good faith.

In addition to your student loans, the court may consider the rest of your debtors, as well as the nature of the debts, to determine whether your hardship is genuine. Investigations will also be used to determine how the student loans were used and whether you have in fact made every effort to repay your student loan as prescribed in the requirements.

Discharging your student loans through these provisions can allow you to be free of your debt and ready to reclaim your financial future. However, you will need to consider whether this is the right path for you. If you have any questions about whether this is the right path for you, you can always discuss your case with a bankruptcy lawyer to get the best advice about how to move forward with your bankruptcy filing.