Bankruptcy Lawyers
South Carolina


New Rules Make It Easier To Discharge Student Loans in Bankruptcy

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Student loan debt in the United States totals $1.727 trillion, marking the first-ever annual decline in 2023. As of March 3, 2024, the outstanding federal loan balance stands at $1.602 trillion, accounting for 92.8% of all student loan debt, with 43.2 million borrowers holding federal student loans. The average federal student loan balance is $37,088, while the total average balance, including private loans, may reach $39,981.

In recent years, lawmakers have introduced measures to address the student debt crisis. One such measure is the requirement to complete the attestation form for discharging student loan debt through bankruptcy. New rules issued on November 17, 2022, have significantly changed the landscape for discharging student loans, making the Brunner test obsolete.

Can student loan debt be discharged through bankruptcy?

Student loan debt can potentially be discharged through bankruptcy under the new guidelines issued by the Department of Education and the Department of Justice. These guidelines simplify the process and provide clearer criteria for discharging student loans. The rules focus on the debtor's current financial situation, future financial outlook, and past efforts to repay loans in good faith. If the court finds that repaying your student loan would cause undue hardship, they may take actions such as:

  • Eliminating your entire debt.
  • Reducing the debt to a manageable level.
  • Extending repayment periods or lowering interest rates to make payments more manageable.

If your student loans cannot be discharged in bankruptcy, you still have several options to manage the debt, including:

  • Enrolling in an income-driven repayment plan.
  • Applying for temporary forbearance or deferment.
  • Consolidating your federal student loans to extend the repayment term and lower monthly payments.
  • Seeking loan forgiveness programs like Public Service Loan Forgiveness and Teacher Loan Forgiveness, which forgive a portion of your debt after a certain number of qualifying payments.

What is the attestation form for student debt loan discharge?

The attestation form, known as "Appendix A," is a 15-page document typically completed with the help of an attorney. It's designed to provide evidence that you qualify for a student loan discharge due to undue hardship by following the new guidelines. The form is divided into six parts:

I. Personal Information: Includes basic details such as your address, household members, student loan balance, monthly payment amount, employment, and other relevant information.
II. Current Income and Expenses: Requests comprehensive information about your household’s gross income and monthly expenses.
III. Future Inability to Repay Student Loans: Requires details about your age, education, unemployment status, and any disabilities that affect your ability to repay in the future.
IV. Prior Efforts to Repay Loans: Covers the history of loan repayments, including amounts paid and details about any applications for forbearance or deferment.
V. Current Assets: Lists current assets such as real estate and automobiles.
VI. Additional Circumstances: Provides an opportunity to present any other relevant information supporting your claim of undue hardship.

Should I consult an attorney if I qualify for student debt bankruptcy?

Many borrowers facing financial hardship are unsure where to turn. The process of discharging student loan debt can be complex, especially with the recent changes. That's why the attorneys at Benjamin R. Matthews and Associates, LLC are committed to guiding you through every step of the process.

If you're struggling under the weight of your student loans and considering bankruptcy, our knowledgeable South Carolina bankruptcy attorneys are here to help you explore your options and develop a strategy tailored to your unique situation. We can assist with completing the attestation form and ensure no errors in the process. We can also gather documents and other evidence to support your eligibility for student loan discharge.

Ben Matthews is the first attorney to get a discharge of a client's student loans in South Carolina, and our firm has successfully obtained the discharge of nearly $30,000 in student loans. Don’t navigate this challenging process alone. Contact us online or call one of our law offices in Columbia or Rock Hill to schedule a free consultation. We’re here to advocate for you and provide the legal support you need.

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Columbia, SC 29201

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Rock Hill, SC 29730

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