Student Loans in NJ Bankruptcy

Info from Our South Jersey Bankruptcy Attorneys

photo of student finances

As the great student loan debate rages on, you may be wondering if bankruptcy is at all an option for dealing with student loans. There is a myth that bankruptcy cannot discharge student loans or help with student loans at all; the truth is that some people are able to find relief from student loans in bankruptcy, and our South Jersey bankruptcy lawyers can tell you whether it can help you and answer your bankruptcy questions.

When Can You Discharge Student Loans in Bankruptcy?

Student loan debt is not entirely nondischargeable:

  • Student loans are dischargeable if they are not insured or guaranteed by a governmental unit or if they are not made under a program with government or nonprofit funding. For example, if you obtained some type of loan to pay for a six week truck driving course, that loan may not be a “student loan” for purposes of bankruptcy, and you may be able to discharge it.
  • Some people are able to discharge their student loans by showing extreme hardship. The extreme hardship standard is a difficult one to meet, but it is not impossible. If you can show the court that you have a hardship that is so burdensome and will last such a long time that you have no reasonable prospect of paying off the debt, you may be able to obtain the discharge.

Even if you cannot qualify to discharge your student loans, however, bankruptcy can still help by discharging your other debts to free up your income to repay your student loans.

Student Loans in Chapter 13

Because Chapter 13 bankruptcy involves a repayment plan, you can use Chapter 13 to reduce the principle on your student loan debts. Also, the automatic stay means that your student loan lender cannot collect from you during the Chapter 13, giving you three to five years without student loan payments. At the end of the case, all your other debts are either discharged, paid off or under control, and your student loan payments will no longer be a burden.

Contact Our South Jersey Bankruptcy Attorneys for More Information

Do not assume bankruptcy cannot help you with student loans. There may be a way to obtain some relief. Contact our South Jersey bankruptcy attorneys now to discuss your student loan situation with our experienced legal team. We serve all the lower 14 counties of New Jersey from our five convenient office locations. Call now.