Student loans differ from credit card bills, medical bills, and other consumer debts, because they are not automatically forgiven in bankruptcy. Instead, borrowers must file bankruptcy, and then file a separate lawsuit to attempt to have their student loan(s) discharged. This process is known for being challenging, expensive, and stressful due to the strict legal requirements. Consequently, most attorneys counsel against spending the money to seek a student loan discharge and as a result the vast majority of debtors do not even attempt it.
However, in November 2022, the Justice Department and Education Department jointly announced a new process that aims to ensure fairer (easier) treatment for those seeking federal student loans forgiveness through bankruptcy. The process provides clearer guidelines about which types of cases would result in a discharge and is expected to simplify the identification of cases in which discharge of student loans is recommended. The process revolves around the completion of a detailed attestation form which takes into account numerous factors including present ability to pay, being of retirement age, not having earned a college degree, having a disability or chronic injury, having a long history of unemployment, or having been in repayment for at least 10 years.
At the Law Office of Michael Primus, we have helped hundreds of clients get out of debt, stop wage garnishments, and start fresh through bankruptcy. If you live in northern California and have debt problems, contact us for a free consultation. Offices in Walnut Creek, Antioch and Hercules.