Student loans and bankruptcy: the ins and outs

The advantages of earning a college degree are endless. However, the number of the nation's students who struggle with loan debt continues to skyrocket. In a time usually fit for celebration, countless graduates reach a new hurdle: looming debt that can hang over one's shoulders for decades. Is there a light at the end of the tunnel for Kentucky students grappling with the financial aspects of education? 

Even if the student loan debt itself is not the only source of one's financial woes, it can create serious damage over time. An article in Forbes examines the steps involved in filing bankruptcy, particularly from the angle of a struggling student. While it is a less common approach than, for instance, filing bankruptcy after credit card debt, turning to this type of plan after college loans become too much is possible under certain conditions. Most apparently, a student must show that he or she suffers from a hardship as a result of the debt. Secondly, those hardships must span over the term of a loan. Finally, there must be clear evidence that the student has made attempts to repay the loan (such as a past failed payment plan). Although each case may be different, Forbes adds that these are the general first steps in bankruptcy.

The website for Federal Student Aid gives a brief explanation of discharge in bankruptcy, stating that students must file a separate action in order to find relief through this plan. Known as an "adversary proceeding," this process later determines a person's eligibility for bankruptcy. After an individual has stated his or her case showing hardship due to debt, a bankruptcy court may determine whether that person can move forward through a number of factors. They may consider the student's standard of living, projected future as a result of the debt and -- as aforementioned -- the person's good faith efforts to repay the loan. Student loan debt is certainly a stressor for a large majority of the country, but there are steps one can consider to make the process a more manageable one.    


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