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Are Student Loans Discharged When Filing Bankrutpcy in Minnesota?

February 20th, 2015 · No Comments

Everyone knows the cost of higher education has increased dramatically. Students grumble about the cost of their student loans, and rightfully so. According to Bloomberg, college costs have soared over 500% since 1985. Who wants to be in debt before they even start their first job? No wonder students might seek ways to erase this debt, even if it entails bankruptcy. The bankruptcy attorneys at Behm Law Group, Ltd., want you to know that normally, student loans are not discharged in a bankruptcy proceeding.

However, 11 U.S.C. sec. 523(a)(8) notes two exceptions to this rule:

1. The student loan cannot be affiliated with a governmental unit or nonprofit entity. This means if a governmental unit insures, guarantees, or funds the student loan in any way, the loan cannot be discharged.

2. If the student, or debtor, incurs an undue hardship in order to pay the loan, it’s possible the student loan could be discharged.

Before October 1998, student loans could be discharged according to certain circumstances, provided the loan was over seven years old. That stipulation no longer applies for loans after October 1998.

Meeting an exception doesn’t automatically mean a student loan can be discharged. The court weighs all factors of each case before making a decision on what is considered dischargeable debt.

Before you incur any student loan debt, you should think very carefully about your academic interests and your possible career objectives. Student loan debt can pile up quickly. It is understandable and common that people must take more than four years to complete a degree. However, if you change course of study too many times, you could find yourself under oppressive student loan debt after you graduate. Education is important, of course, but you might want to explore more affordable options if your first choice in schools would break your piggy bank.

It wouldn’t hurt to make sure you major in a viable field that can generate sufficient income to pay for your living expenses as well as your debt. Finances can bring a real-world mentality to those ideals of simply following your whims. Sometimes, you either have to be creative in developing a job for yourself or you have to just accept an available position until you can afford to leap to something you would enjoy more.As stated, the court views several factors in student loan bankruptcy cases. If you want to explore your options in Mankato, Minnesota, contact the bankruptcy attorneys at Behm Law Group, Ltd. We restrict our practice to only bankruptcy. ¬†You can expect the best from us.

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