Do you have student loan debts that you are unable to repay? If so, you may be looking into bankruptcy as a solution to your problem. Here is what you should know about using bankruptcy to get rid of this expensive debt.

What Will Happen To Your Student Loans?

The method of bankruptcy that you use will determine what happens to your student loans. Using the Chapter 13 method will actually put student loans into a repayment plan. This method can work if you have other debt in addition to student loans, and are having trouble paying off everything at the same time. Some situations allow a partial balance of your loan debt to be discharged, but only if certain criteria have been met.

Chapter 7 bankruptcy is the one method that has the potential to discharge these debts completely. It will ultimately be the court's decision as to if the debt will go away for good, which depends on if you are capable of paying back the debt.

How Can Student Loans Be Discharged?

When using bankruptcy to discharge student loan debt, you must prove it will be impossible ever to pay back the loan. One way this is done is by using the Brunner test. It assesses your current financial situation, as well as a history of making loan payments, and comes to a conclusion about if your debt will be allowed to be discharged.

Another reason why student loans can be discharged is if you've undergone extreme financial hardship. This can happen from losing a job and being unable to find a new one, which has caused you to rack up massive debt in the process. Of course, you must also show that you have made every effort to pay back your loans before and after your financial hardship, or else you won't qualify for the loan discharge.

What Will Give You The Best Chance Of Having Student Loans Discharged?

In general, don't expect a discharge if there is a possibility that you can make the loan payments again. You also should not view bankruptcy as a way to get rid of a debt that you do not want to pay.

Your goal should always be to repay your debts unless you are not able to do so. Make your biggest debts your priority, which can help justify discharging them during your bankruptcy case. If you make an honest effort and still cannot pay back the debt, a judge will hopefully side in your favor.

For more information, contact a law office like Law Office of Barbara B. Braziel.