Bankruptcy and Student Loans in New Jersey
EH – Bankruptcy and Student Loans in New Jersey – Law Office of Edward Hanratty
Law Firm Information: Bankruptcy Law – New Jersey – 732-866-6655 Website: www.wwwlawofficeofedwardhanratty.com
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Bankruptcy and Student Loans in New Jersey
Student loans can impose serious financial hardship on Americans of every age. From taking out tens of thousands of dollars to cover tuition, to interest, to late fees, the student loan crisis continues to grow. However, similar to credit card debt and private loans, there are circumstances in which student loan debt can be fully or partially discharged through the bankruptcy process, if you follow the proper procedure. For many people, bankruptcy and student loans in New Jersey can have a significant impact on one another. If you are unable to pay back your student loans, bankruptcy may be a viable option for you. Contact the Law Office of Edward Hanratty at 732-866-6655 to speak with an experienced bankruptcy attorney and learn if you have the ability to discharge your student loans.
What Is Bankruptcy?
Bankruptcy is a formal legal proceeding available in the United States that allows people in serious debt to either have their debt discharged (eliminated) or repay their creditors. Bankruptcy is a legal option for those looking for a financial fresh start.
There are advantages and disadvantages to declaring bankruptcy, and it is not right for everyone. The main advantage of declaring bankruptcy is that it gives debtors options to start fresh with either a clean slate, or a repayment plan (depending on what type of bankruptcy a debtor chooses). The disadvantage, however, is that bankruptcy can severely harm the debtor’s credit score, making it very difficult for them to get approved for credit cards, receive loans, rent property, or secure mortgages for a period of time moving forward.
When Can Student Loans Be Discharged in Bankruptcy?
For many years, people operated under the assumption that student loan debt was impossible to discharge during the bankruptcy process. Many of those who carry student loans believe that declaring bankruptcy would not help them with their student loan debt. This assumption prevented many people from pursuing bankruptcy when it may have been the most viable option for them to financially recover. In fact, student loan debts can be wiped completely away in certain circumstances. It is important to note that there are specific circumstances in which student loans are allowed to be discharged within a bankruptcy and visiting with an experienced bankruptcy attorney familiar with this process at Law Office of Edward Hanretty can help answer your questions about your specific situation.
Chapter 7 or 13 Bankruptcy
There are circumstances in which student loans can be discharged in either a Chapter 7 or Chapter 13 bankruptcy. There are significant differences between the two, and you should consider discussing your situation with an experienced New Jersey bankruptcy attorney to determine which form of bankruptcy would be right for you, if any.
Chapter 7 bankruptcy is more appropriate for people who do not have the means to pay back their loans or debts at all. In a Chapter 7 proceeding, the debtor’s non-exempt assets are liquidated, and a trustee pays the creditors with any remaining assets from the debtor. After these payments are disbursed, the debtor’s debts are discharged. In a Chapter 13 bankruptcy, on the other hand, the debtor must pay back the debtors over a reasonable period of time according to a repayment plan approved by the bankruptcy court.
Is Student Loan Cancellation Automatic?
No. In addition to declaring bankruptcy and fulfilling all of the legal requirements to complete the process, you must complete an additional step to seek cancellation of outstanding student loans.
The process of cancelling student loans can be a legally challenging and complex option for debtors. There are specific questions that must be asked, and answered, in a certain way in order for the student loan cancellation process through bankruptcy to occur. Visiting with an experienced bankruptcy attorney can help you determine if you qualify to have you student loan debts cancelled.
What Other Options Are Available?
The outcome of the adversary proceeding regarding student debt cancellation in a bankruptcy can either be a full or partial discharge of the debt, or the court may decide not to discharge the debt at all. If a debtor is unable to have their student loans discharged, they may still be able to construct a new repayment plan with their student loan servicer
If you are unsure about declaring bankruptcy and believe you may have the ability to repay your student loan debt on a different type of payment schedule, you have other options. According to the Federal Student Aid website, other repayment plans include the Graduated Repayment Plan, the Extended Repayment Plan, and the Pay As You Earn Repayment Plan, which fixes your monthly payment as a proportion of your income. Though this does not remove the stress of having a huge amount of debt looming over you, it can at least lower your monthly payment to allow you additional income to pay your living expenses.
How Likely Am I to Have Student Loan Debt Discharged?
Despite the strange phenomenon of debtors giving up on trying to eliminate student debt, there is a relatively high success rate. According to a study from the University of Iowa suggests that people who pursue an adversary proceeding to relieve student debt are successful nearly half of the time. Success is especially likely if you have a very low monthly income or some persistent medical condition. Visiting with an experienced student loan debt discharge attorney can help you understand your legal rights.
Contact an Experienced New Jersey Attorney Who Knows Bankruptcy and Student Loans
One of the most persistent reasons people do not get their student loan debts discharged through bankruptcy is they do not know that they have this option available to them. Our office has seen how full or partial discharge of student loan debt can be like starting a new life for our clients. That stressor that has been hanging over you since college can be wiped away, and hope for your future can be restored. At the Law Office of Edward Hanratty, we understand the interrelationship between bankruptcy and student loans, and we do everything we can to help our clients regain their financial independence. Call us today at 732-866-6655 to schedule a consultation.