Philadelphia Student Loan Bankruptcy Lawyer

There are many benefits to filing bankruptcy. For example, filing for bankruptcy immediately triggers the “automatic stay,” a period when creditors cannot initiate debt collection proceedings against you.

Bankruptcy can also help you keep possessions that might otherwise be repossessed. However, the greatest advantage of filing for bankruptcy is arguably the relief from debt.

Not all debts are treated the same in bankruptcy. When a person files bankruptcy in Philadelphia, his or her debts are divided into two categories:

1. Dischargeable debts, or debts that can be wiped out by the bankruptcy court. When the case ends, the filer’s dischargeable debts continue to exist, but the filer is no longer responsible for paying them off.
2. Non-dischargeable debts, or debts that cannot be wiped out by the bankruptcy court. When the case ends, the filer’s non-dischargeable debts will continue to exist, and the filer will still be responsible for paying them off.

Student loan debt is normally a non-dischargeable debt, which means that in most cases, bankruptcy does not erase debts related to student borrowing.

There are, however, exceptions to this rule. Depending on how much debt you owe, and how severely the debt is impacting you financially, the bankruptcy court may agree to discharge your student loan debts.

For this to occur, you must meet specific criteria referred to as the “Brunner test.” Bankruptcy courts use the Brunner test to evaluate the financial impacts of a filer’s student loan debt.

If the court finds that the filer has been impacted adversely, that the situation is unlikely to change, and that the filer has made sincere payment efforts prior to filing bankruptcy, the court may agree to relieve the debt. Specifically, the filer must show the court that:

1. The filer – or, where applicable, the filer’s dependents – cannot maintain a “minimal” standard of living because of the debt.
2. The present situation is unlikely to change at any time during the repayment period – for example, because the debtor does not anticipate a raise or promotion.
3. The filer has made reasonable efforts to make full and timely payments to the best of his or her financial ability.

To reiterate, bankruptcy courts in Pennsylvania generally do not discharge student loan debt.

If college loan debt is the main reason you are filing for bankruptcy, it is crucial that you are represented by a knowledgeable attorney who understands how to present clear, compelling, and comprehensive evidence of the financial hardship your debt has caused.

Without strategic legal representation, you are unlikely to obtain the discharge you are seeking.