When Can Student Loans Be Discharged In Bankruptcy?

Student Loans Be Discharged In Bankruptcy

Student loan debt has skyrocketed past credit card debt in the United States. Mortgage debt is the only debt category with a higher amount owed compared to student loan debt. According to one source, over 44 million individuals owe a combined $1.5 trillion in student loan debt. Graduates in 2017 owed an average of $40,000 in student loans. Most students spend over 19 years paying off loans they received for their college education.Sadly, almost 40 percent of borrowers are expected to default on their student loans by 2023. When you consider that most student loan debt is not dischargeable in a bankruptcy case, it is difficult to comprehend what a borrower should do if he or she cannot afford student loan payments.

Student Loans Be Discharged In Bankruptcy

Discharging Student Loans in a Chapter 7 Bankruptcy Case

While most student loans are not eligible for a bankruptcy discharge, some debtors may qualify for a discharge of student loans. However, debtors must meet strict eligibility requirements to discharge student loans in bankruptcy. The court must determine that the debtor will experience an undue hardship if the debtor is required to repay the student loans.

In February 2018, The Education Department announced that it would be reviewing the requirements for determining if a debtor qualifies for a bankruptcy discharge of student loan debt. Until the federal government changes the standards, the bankruptcy courts continue to apply the Brunner Test to determine if a debtor qualifies for a student loan discharge in Chapter 7.

The Three-Prong Undue Hardship Test for Discharging Student Loans in Bankruptcy

The court case of Brunner vs. New York State Higher Education Services Corp. established the three requirements for determining whether a debtor will experience an undue hardship if required to repay student loans. Before a debtor can discharge student loans in Chapter 7, the court must find that the debtor meets all three requirements as outlined in the Brunner case.

The three-prong undue hardship test for student loan debt examines three factors:

  • Can the debtor maintain a minimal standard of living? The court examines the debtor’s anticipated standard of living if the debtor continues to repay the student loans. Basic living expenses such as food, clothing, and shelter are included in the calculation of the minimal standard living requirement. Optional expenses, such as gym memberships, cell phone plans, and cable television are typically not considered basic living necessities to evaluate a minimal standard of living.
  • Whether the debtor’s current financial situation is expected to continue.  If the debtor has only been unemployed for a short time, the debtor may not qualify for an undue hardship discharge. The debtor’s financial situation must be expected to continue for most of the term of the student loan. For instance, a debtor who may never work again because of a permanent disability may meet this requirement.
  • Has the debtor made a good faith effort to repay the student loan debt? The debtor must demonstrate that he or she paid the student loan payments until financial circumstances made it impossible to continue paying the monthly payments. The court may also consider whether the debtor tried to modify the loan payments, applied for a forbearance agreement, or made other financial sacrifices to meet their obligations under their student loan notes.

The interpretation of the Brunner requirements can vary from one jurisdiction to another jurisdiction.

It is important to work with an experienced Florida bankruptcy attorney who understands the Brunner Test. You will need assistance from a bankruptcy attorney in Florida to prepare and file the necessary documents to request a hearing. You also need an experienced attorney to argue why you should receive an undue hardship discharge of your student loans during the court hearing.

Call an Orange Park Bankruptcy Attorney for More Information

Tony Turner assists clients in Orange Park, Jacksonville, Lake City, Deland, Augustine, and the surrounding areas as they seek affordable solutions to debt problems. If you want to explore bankruptcy options to get rid of debt, contact The Law Office of Tony Turner for a free consultation.

Call (904) 679-2020 or use the online form to schedule your free consultation with a Florida bankruptcy lawyer.

Three Important Debts That You Cannot Discharge in a Florida Bankruptcy

When you file for bankruptcy relief, your goal is to get out debt. For that reason, you want to discharge as many of your debts as possible. While most unsecured debts are eligible for a discharge in Chapter 7 and Chapter 13, several debts cannot be discharged in bankruptcy.
Common debts that are not eligible for a bankruptcy discharge include:

  • Alimony or spousal support
  • Child support
  • Most debts owed to government entities
  • Income Taxes
  • Student Loans

In some cases, a debtor can discharge income taxes if the taxes meet all of the requirements for discharge of old tax debt. Furthermore, some debtors qualify for a hardship discharge of student loans. However, most income taxes and student loans are not dischargeable in a bankruptcy case.

Are There Other Debts That Are Not Dischargeable?

Yes, other debts may not be dischargeable in a bankruptcy case. Creditors may file an objection to discharge to stop the debts from being discharged pursuant to bankruptcy laws. An adversary proceeding is a lawsuit within the bankruptcy court seeking various relief. Creditors who believe that their debts are not eligible for a discharge under bankruptcy laws may file an adversary proceeding in your case.

Defending an adversary proceeding can be expensive and time-consuming. It is always best to disclose all information to your Florida bankruptcy attorney about your debts. Your bankruptcy lawyer can deal with a variety of issues within a bankruptcy case, but he must know about the issues to deal with them effectively.

Debts That May Be Allowed After a Creditor Objects to Discharge or Files an Adversary Proceeding

Three debts that might be allowed if a creditor or party files an adversary proceeding under Bankruptcy Code §523 are:

  • Debts for Luxury Goods Within 90 Days of Filing Bankruptcy

Under §523 of the Bankruptcy Code, the court may declare a debt non-dischargeable if the debt was incurred under “false pretenses, a false representation, or actual fraud.” The code section does not explain or define these terms. Therefore, the court applies the decisions in previous cases to determine if a debt was obtained under fraud or false pretenses when a creditor objects to discharge based on these grounds.

One of the common types of transactions that fall within this category is the purchase of luxury goods within 90 days before filing your bankruptcy petition. If you incurred consumer debt to purchase $675 in “luxury” goods or services within the 90 days of filing your bankruptcy petition, the court will presume the debt is non-dischargeable unless you can prove that there was no intended misrepresentation or fraud.

The creditor does not need to prove that you did not intend to pay the debt to win the case because of the automatic presumption that you knew you would be filing for bankruptcy relief within three months and would not be required to repay the debt.

“Luxury” goods or services do not need to be high-dollar, brand name, or designer goods and services. Goods and services may fall into this category if they are not reasonably necessary for your maintenance or support or the maintenance and support of your dependents. Convincing the court what is “reasonably necessary” could be an uphill battle.

  • Credit Card Debt Incurred to Pay Debts That Would be Non-Dischargeable

Credit card debt that is not incurred through fraud, misrepresentation, or other illegal circumstances is typically dischargeable in bankruptcy. Most debtors discharge all credit card debt when they file for bankruptcy relief. However, a creditor may object to your discharge if you used your credit cards to pay debts that would otherwise be non-dischargeable in your bankruptcy case.

For example, domestic support (alimony, spousal support, and child support) is non-dischargeable in a bankruptcy case. Most student loans and income tax debts are also non-dischargeable in Chapter 7 and Chapter 13 cases. If you use your credit cards to pay these debts before filing a bankruptcy case, the creditor may successfully challenge the discharge.
The theory is that a debtor should not be allowed to use credit that is typically dischargeable to get rid of debts that the debtor is legally liable to pay regardless of whether the debtor obtains a bankruptcy discharge.

  • Damages Related to Intentional Acts That Cause Another Person Injury or Damages

Section 523(a)(6) prohibits a debtor from discharging debts that are incurred because of the “willful and malicious injury” to another person. These acts are known as “intentional torts,” including personal injury judgments and settlements.

A common example of a debt that is typically not eligible for discharge under this section would be a personal judgment related to a drunk driving accident or a drugged driving accident. Another example would be if the debtor intentionally caused another person injury by assaulting the person physically.

For example, if a debtor has a personal injury judgment arising from a DUI accident for $50,000, that debt would probably not be dischargeable in a bankruptcy case.

Notify Your Orange Park Bankruptcy Attorney of Unusual Issues Immediately

Even though you may owe a debt that is potentially non-dischargeable, there might be a way to file for bankruptcy relief to get rid of the debt. For instance, the timing of your bankruptcy filing may be adjusted to decrease the chance the creditor may file an adversary proceeding objecting to discharge. However, your attorney must be aware of the issue to develop a strategy for dealing with any potential problems.

 Being honest and upfront with your bankruptcy attorney is the best way to avoid problems in your bankruptcy case. Your attorney is your legal advocate to protect your best interest. Help your attorney by disclosing all information, even if you do not think it may be relevant.

Contact an Orange Park Bankruptcy Attorney for More Information About Debts You Can Discharge in Bankruptcy

Bankruptcy lawyer Tony Turner assists clients in filing bankruptcy and exploring other debt relief options. If you want to discuss ways to eliminate your debts, Contact The Law Office of Tony Turner for a free consultation. Call (904) 679-2020 now to speak with an experienced bankruptcy lawyer in Orange Park, Florida.


It’s safe to say that no one wants to file for bankruptcy. Deciding it’s something you must do is incredibly painful, humbling and embarrassing. Often the hardest part is committing to retaining a bankruptcy attorney and the recovery or financial healing process.

From what I have seen, the most common causes of financial hardship is the loss of a job, divorce, death of a spouse or being sued. Rarely has someone retained me and filed because of medical bills. Doctors almost never sue you to collect, credit cards companies sue often.

Once a debtor realizes and decides they must file bankruptcy, they consult with Mr. Turner. Afterward, they express relief and are confident the decision is the right one. They understand bankruptcy is not “the end,” but rather the beginning. The beginning of financial recovery, reduced stress a fresh financial start for the debtor and their family, a much needed and well deserved second chance.

The financial and emotional healing has begun, the embarrassment dissipates, and they realize the misconceptions and stereotypes perpetuated by the media and the credit card companies is foolish. Bankruptcy is not a “necessary evil” but a God-send to those drowning in debt.

Once the debtor understands that often they have paid the credit card companies more money than they have ever borrowed, the decision is a no-brainer. Keep in mind that Bankruptcy is a right The United States Government has given to you. Take full advantage of any rights the government provides its citizens. Do not let people who do not have to live with the consequences of their decisions and opinions persuade you to pay for the debt you cannot afford or use “debt settlement companies” that rarely work. You have earned the right to a fresh start.

Below are some common questions Clients ask me when considering filing for bankruptcy protection

1. Will I ever get credit again after I file for bankruptcy?

Of course, you will. The lenders want you back in debt. They know you can’t receive another discharge in bankruptcy for several years. You will receive offers of credit cards often before you’re out of bankruptcy. I receive letters often from car dealerships asking my clients to call them for a new car loan. Getting into debt is easy. Getting out is the hard part.

Should you apply for loans? Maybe. My suggestion is to be very careful. Maybe take out a “secured loan” at their bank. Use your money and not someone else’s. Rebuild your credit wisely. If done right, you can have a good credit score within 24 months.

2. Will bankruptcy affect my credit score?

For some, not at all. Most debtors were already delinquent on their debt, facing foreclosure, garnishment, lawsuits, and repossession. Bankruptcy improves their financial position and their credit score. Typical your credit score is used to get credit. Creditor rather debt from the loan was the problem. Don’t get caught up in your credit score. Focus on your liquidity. How much money do you have left over every month now that the debt is gone? Save that money and increase your net worth.

3. Will I lose my car, house, retirement or other assets as a result of filing for bankruptcy protection?

Most of the time NO. The Bankruptcy Code allows you certain exemptions which can get tricky and complicated. You need to consult with an experienced bankruptcy lawyer to determine how to proceed. Often debtors ask with me too late, they have sold assets or liquidated retirement accounts needlessly. They wasted away what money they had left that I could have protected, and they could have kept.

Sometimes clients retain me but do not file bankruptcy for a year or so. Planning and timing can save your house, retirement and thousands and thousands of dollars. It could be the difference between filing a Chapter 7 and getting a discharge in 80 days while paying nothing and keeping all your assets versus being in Chapter 13 for five years and spending thousands of dollars.

Most bankruptcy attorneys will provide an initial consultation for free. Please take advantage of that and utilize their knowledge.

4. Will my friends, family or employer find out about my bankruptcy?

Probably not, unless you owed them money. Although Bankruptcy filings are public record, they are difficult to locate. The average person will not be able to find your petition. Even if they do, so what.

Bankruptcy means you have discharged your debt and are in a better financial position than you were.

5. Can I file bankruptcy if I am employed, unemployed or retired?

Absolutely! Your employment status will not affect your ability to file for bankruptcy protection. Although, your income may change what Chapter you file, 7 or 13. You can ask for bankruptcy protection whether you’re working or not.

I hope you have found this helpful and if you need an experienced bankruptcy lawyer, I hope you consider retaining The Law Office of Tony Turner.

Should I File a Chapter 13 Bankruptcy Case or a Chapter 7 Bankruptcy Case?

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As a Bankruptcy Lawyer in St. Augustine and Orange Park Florida, I realize deciding whether to file a Chapter 7 or a Chapter 13 case can be confusing to most clients.

First, you will want to schedule a conference with your bankruptcy lawyer to discuss in great detail you financial situation and the assets you own. This will help your attorney determine which chapter of bankruptcy will be the best for you. The goal is to discharge your debts in the most affordable and effective manner.

The Law Office of Tony Turner has offices in Orange Park, St. Augustine, Deland, Jacksonville, & Lake City, Florida to meet with clients and provide them with the appropriate legal advice and guidance. Most clients want a “bankruptcy lawyer near me”, hopefully one of these offices is conveniently located.

Your Bankruptcy Lawyer must be concerned, aware and take into consideration which Chapter of the United States Bankruptcy Code protects your property from the United States Trustee the best. The Trustee is assigned by the Bankruptcy System to oversee and review your bankruptcy petition. The Bankruptcy Trustee is charged with the responsibility of determining if there are any assets to recover and sell. The proceeds will then be used to pay your creditors. An experienced Florida Bankruptcy Lawyer will know which Statutory exemptions to apply to protect your assets. This is a must. A mistake in applying the proper exemption could be devastating to a debtor financially.

A Florida Bankruptcy Lawyer should thoroughly review your financial records including: tax returns; bank statements; pay stubs; retirement accounts; automobiles and the loans attached; liens and any other assets whether liquid or not to determine which Chapter of Bankruptcy is right for you or whether you should even file for bankruptcy or can file.

The Law Office of Tony Turner offers free consultations so that you he can educate you about the Bankruptcy Law, the Exemptions available and advise you what to do and what not to do before you file for bankruptcy. Attorney Turners clients learn about the debt relief options available and whether they qualify for bankruptcy without worrying about how to pay attorney fees for the consultation. It’s free.

A Chapter 13 bankruptcy case is a reorganization. You can reorganize your debts into an affordable bankruptcy plan.

A Chapter 7 bankruptcy case is a liquidation bankruptcy. Chapter 7 takes less time and costs less than a Chapter 13.

But Chapter 7 is not the best choice for every person. In addition, you must meet income requirements to be eligible for a bankruptcy discharge under Chapter 7

Let’s look at each bankruptcy chapter closely to weigh the pros and cons of each debt relief option.
What is Involved in Filing Chapter 13 in Florida?
As discussed above, a Chapter 13 case is a reorganization of your debt through a repayment plan. With a Chapter 13 bankruptcy case, you can get rid of unsecured debts for a small fraction of what you owe. Instead of paying the full balance owed to each unsecured creditor, you pay a percentage of the debt. In some cases, debtors may pay pennies on the dollar, depending on their financial situation.
Some benefits of a Chapter 13 bankruptcy case include:
* Allows you to get rid of unsecured debt for a fraction of what is owed to the creditor.
* Can stop foreclosures and repossessions so that you can keep your home and vehicles.
* In some cases, a debtor may be able to get rid of a second mortgage for a fraction of what you owe the lender.
* You may be able to lower your car payments by modifying the term of the loan and the interest rate through a Chapter 13 plan.
* You have up to 60 months to pay back due taxes in a Chapter 13 case.
* If you owe alimony or child support, you can stop a contempt action and pay the past due support through your Chapter 13 plan. However, you must pay all future support payments on time.
* If you have equity in an asset that exceeds the allowed bankruptcy exemptions, you can protect that asset by filing a Chapter 13 case.
* Some disadvantages of a Chapter 13 bankruptcy case include:
* A typical Chapter 13 plan is a 60-month repayment plan. Therefore, you are in Chapter 13 for over five years.
* During your Chapter 13 case, you cannot transfer substantial assets, refinance loans, or incur new debt without court approval.
* The percentage you must pay toward unsecured debts is based on several factors, including your income, assets, and certain recent financial transactions.
* A Chapter 13 case can help you save your home, car, and other assets. It can also help you get out of debt for less than you owe right now.

Your Florida Bankruptcy attorney also checks to see if you are eligible to file under Chapter 7.

What is Involved in Filing Chapter 7 in Florida?
You may have heard stories about people losing everything they own when they file for debt relief under Chapter 7. This bankruptcy myth is not true. Most debtors do not lose any of their property when they file a Chapter 7 case. Let’s look at the pros and cons of a Chapter 7 bankruptcy case to help you understand what is involved in filing under this chapter of bankruptcy.
Some benefits of a Chapter 7 bankruptcy case include:
* Most Chapter 7 cases are completed within four to six months after the filing of the bankruptcy petition.
* You are not required to repay any portion of unsecured debts that are eligible for a bankruptcy discharge.
* Bankruptcy exemptions typically protect all your property, so that you do not lose any property if you file a Chapter 7 bankruptcy case.
* You can surrender collateral in full satisfaction of a lien without worrying about the lender obtaining a deficiency judgment for any remaining balance owed after the collateral is liquidated.
* Some disadvantages of a Chapter 7 bankruptcy case include:
You could lose an asset if the bankruptcy exemptions do not cover the equity in the asset and you cannot afford to “buy back” the asset from the Chapter 7 trustee. Again, most Chapter 7 cases filed in Florida do not result in the loss of property to the Chapter 7 trustee.
You must remain current on your mortgage and car loan payments to keep the assets. A Chapter 7 bankruptcy case stops foreclosures and repossessions for a short time. You must catch up the payments and remain current to keep the collateral.
Likewise, you do not have 60 months to pay back taxes or unpaid support payments when you file a Chapter 7 case.
You must meet strict income requirements to be eligible for a bankruptcy discharge under Chapter 7. If you “fail” the Means Test, you are not eligible for a bankruptcy discharge in Chapter 7.
Before you file a Chapter 7 bankruptcy petition, you need to consult with a Florida bankruptcy attorney. Once you file a Chapter 7 case, you are not entitled to dismiss the bankruptcy case voluntarily without court approval.
You can also find more information about filing for bankruptcy relief on the FAQ section of our website.
Seek Advice From an Experienced Florida Bankruptcy Attorney
If you are struggling with debts that you cannot pay each month, you may benefit from filing for bankruptcy relief. However, filing a bankruptcy case is a complex matter. You should only file a Chapter 7 or Chapter 13 case after consulting with a bankruptcy lawyer. A bankruptcy case gets rid of debt; however, you need to consider all debt relief options before choosing bankruptcy as your path to eliminate debt.
Tony Turner represents clients throughout Orange Park, Jacksonville, Lake City, Deland, Augustine, and the surrounding areas. If you need an affordable solution to your debt problems, call now for a free case review.
Contact The Law Office of Tony Turner for a free consultation. An experienced Florida Bankruptcy Lawyer is a must. Call (904) 679-2020 or use the online form