How Student Loans Are Treated in Bankruptcy

Student loans remain one of the most misunderstood debts among clients in Pickerington, Lancaster, and central Ohio. Unlike most unsecured debts, student loans are generally not automatically discharged in bankruptcy.

To discharge student loans, borrowers must file a separate legal action called an adversary proceeding and prove undue hardship under strict legal standards. This is a challenging process, but in rare cases it can succeed.

Even when student loans cannot be discharged, bankruptcy still provides important relief. By eliminating other debts, clients are often left with more monthly income available to focus on student loan repayment.

In Chapter 13 bankruptcy, student loans are placed into the repayment plan. While the loan may not be discharged, collection activity is paused during the case, and interest may be limited in certain circumstances.

Wage garnishments for defaulted student loans can also be stopped by bankruptcy, including government administrative garnishments.

For Fairfield County residents overwhelmed by student loans in addition to credit cards, medical bills, or personal loans, bankruptcy may be the step that restores long-term financial balance.

For more information, call the Law Office of David A. Bhaerman at 614-834-7110 or schedule a Free Consultation Online.