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TJ, Esq.
TJ, Esq., Attorney
Category: Legal
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Experience:  JD, MBA
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If im having an extreme hardship paying student loans can I

Customer Question

if im having an extreme hardship paying student loans can I claim bankruptcy. I have 36000 in private student loans and about 23000 in federal along with 12000 in othe unsecured debt. between my wife an I income we cant even afford to pay the two federal loans they have remained in deferment for 2years. we live paycheck to paycheck
Submitted: 4 years ago.
Category: Legal
Expert:  TJ, Esq. replied 4 years ago.

Hello and thank you for allowing me the opportunity to assist you.

While it is sometimes possible to discharge student loans in bankruptcy, it is, unfortunately, difficult to meet the standard. Student loans can only be discharged if they pose an undue hardship. The 10th Circuit Court of Appeals, which has jurisdiction over Kansas, stated:

The phrase "undue hardship" is not defined in the Bankruptcy Code. In Educational Credit Management Corp. v. Polleys (In re Polleys),*****of Appeals for the Tenth Circuit adopted, with some limitations, a test originally established by the Second Circuit in Brunner v. New York State Higher Educ. Servs. Corp. 13 for determining whether repayment of student loans imposes an "undue hardship" within the meaning of § 523(a)(8). Under the "Brunner test," the debtor must prove by a preponderance of the evidence:

(1) that the debtor cannot maintain, based on current income and expenses, a "minimal" standard of living for herself and her dependents if forced to repay the loans; (2) that additional circumstances exist indicating that this state of affairs is likely to persist for a significant portion of the repayment period of the student loans; and (3) that the debtor has made good faith efforts to repay the loans.

A student loan debt is nondischargeable under § 523(a)(8) if the debtor fails to show any one prong of this test.
Azwar v. Tex. Guaranteed Student Loan Corp. (In re Azwar), 326 B.R. 165 (B.A.P. 10th Cir. 2005).

So, if you can prove (1), (2) and (3) above, then you can discharge the student loans. Unfortunately, proving (1), (2) and (3) is an extremely difficult burden to meet. In the same case, the 10th Circuit also noted that "undue hardship is something more than inconvenience or doing without luxuries . . . 'the discharge of a student loan should be based upon an inability to earn and not simply a reduced standard of living."

In any event, since you may qualify to discharge the student loans, I suggest that you consult with a local bankruptcy attorney who can review your situation in detail and help you file for bankruptcy if it makes sense in your situation.

Does that answer your question? Let me know if you need clarification, and please remember to rate me positively so that I receive credit for my efforts.

Thank you and good luck!

Expert:  TJ, Esq. replied 4 years ago.
Hi again.

I noticed that you rated me poorly. I'd like to give you a reason to rate me higher. Do you need clarification, or did I not fully answer your question?

It looks like your question was: "if im having an extreme hardship paying student loans can I claim bankruptcy."

I answered that question and supported my answer with case law in your jurisdiction.

I'll be glad to provide further help if necessary, and I'd greatly appreciate you reconsidering your rating of me.

Thank you.