Charles J. Schneider, P.C.certified consumer bankruptcy specialist
forms for your office visit
call today 734-237-1523
Practice Areas Menu In This Section

In a rare move, court discharges student debt in bankruptcy

Recent college graduates keenly understand how difficult it can be to deal with student loan debt at a time when the job market in Michigan is still recovering. Yet when individuals fall behind on bills and they decide to file for personal bankruptcy, it's unlikely they will be able to discharge their student loans.

In a recent court decision, however, a woman received approval to have $25,000 worth of student loans discharged. By demonstrating that she was "destitute" and had no means to pay back the student loan debt, the court granted an exception to the typical rule. The woman in this case had paid as much as she possibly could over the course of 11 years and could no longer afford to do so in the future.

If a court allows this kind of debt to be discharged, it's likely that extraordinary circumstances were at play. People facing this kind of financial stress could benefit from consulting with an attorney to explore all available options to find lasting relief.

Knowing that student loan debt won't be discharged in most cases, it's important to understand some of the potential debt relief options available to financially stressed graduates. For those who meet the income requirements, Chapter 13 could be a viable option. Under this type of bankruptcy, some debts are discharged, but the rest are paid off over the course of three to five years.

Although Chapter 13 may not be the best solution for everyone, being allowed to pay back student debt over time can provide enough leverage for individuals to find a clear path to financial independence.

Source: ABA Journal, "7th Circuit OKs $25K student-loan discharge for 'destitute' paralegal," Martha Neil, April 10, 2013

  • To learn more about the topics discussed in this post, please see our firm's Detroit Chapter 13 page.

No Comments

Leave a comment
Comment Information
  • rating

    Posted by MaryDecember 11, 2015

    "I am overwhelmed by your response to my call, even 10 years after my bankruptcy was discharged. You have more knowledge and expertise than I could have imagined. Because of you, my fears have been put to rest. For that, I'm so very grateful. Thank you many times over. "

  • rating

    Posted by ClientOctober 26, 2010

    "... I was extremely impressed with Charles' understanding of the bankruptcy laws to the extent that I felt certain that my best interests were always at the forefront. "

  • rating

    Posted by MarleneJanuary 8, 2014

    He helped me thru my 1st bankruptcy and now the second. I had no idea what to expect , but they kept me informed and answered all my questions. Mr. Schneider is the most experienced and knowledgeable lawyer I have ever met. If you have to file call this attorney first!

  • Avvo Rating 10.0 superb | Top Attorney Bankruptcy
  • Rated By Super Lawyers Charles J. Schneider | visit superlawyers.com | super lawyers 2011-2015
  • Avvo Ratting 10.0 superb Top attorney chapter 7
  • Avvo clients' choice 2014 | chapter 7
  • ICLE CONTRIBUTOR
  • American board of certification | certified consumer bankruptcy specialist
  • AV lexisNexis Martindale-Hubbell Peer Review Rated for ethical standards and legal ability
email us for a response

Let us evaluate your situation
and identify solutions

Bold labels are required.

Contact Information
disclaimer.

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.

close

Privacy Policy