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Bankruptcy and student loans

On Behalf of | Apr 28, 2022 | Uncategorized |

Declaring bankruptcy for student loans in Tennessee is very difficult as the bar for declaring bankruptcy for these loans has been very high. However, some senators have been asking the Education and Justice department for reform.

What borrowers must show the court

To declare bankruptcy for student loans, borrowers must show that they do not have enough funds to maintain a minimal standard of living. They must show that this does not look like it will improve in the future. The debtors must also need to prove that they have made an effort to repay.

As a former student, you must show “hopelessness.” This may be difficult for students without legal representation.

The Justice Department has reduced some of its appeals

There is a bit of progress; courts are not appealing to students seeking bankruptcy as much as in the past few years. However, lawmakers want the process to be easier for students, making it fairer and simplifying it at the same time. They do not want to have the government oppose bankruptcy for students who are already struggling.

Those who have debt from a loan for schooling will be relieved to know that changes may be coming as President Biden looks at the dilemma of student loan debt. Student loans might receive forgiveness if economic advisers to the president agree.

Some 27 senators are challenging the Education and Justice Department to reform the student-loan bankruptcy discharges. They want to ease the turmoil of having to prove hopelessness in court in order to have financial burdens lifted. There are ways to have student loan debt forgiven, but they are a number of stipulations, and not all borrowers qualify.