Texas Firm Provides Knowledgeable Counsel on Student Loans and Bankruptcy
Skilled legal team with offices in El Paso and Arlington assists clients
A good university education can be the key to success, but it can also saddle graduates with unmanageable debt. Although it’s not easy to get a bankruptcy court to wipe out student loans, it is possible in certain circumstances. The Law Offices of Cheryl S. Davis, P.C., with offices in El Paso and Arlington, works to relieve student loan debt for Texans who are financially overburdened.
How does filing for bankruptcy affect a student loan obligation?
When a debtor files for bankruptcy, the court imposes an automatic stay. That means that creditors identified in the bankruptcy filing, including student loan lenders, must stop all efforts to collect the debt outside of the bankruptcy process, unless the bankruptcy court grants an exception. This is true regardless of whether the debtor who filed for bankruptcy is the person who took out the student loan or merely co-signed the loan. In a Chapter 7 bankruptcy, the automatic stay applies only to the bankruptcy filer, but in a Chapter 13 bankruptcy, it applies to the co-signer, even if they did not file for bankruptcy.
What must be demonstrated to get a student loan debt discharged?
Most student loans are non-dischargeable, meaning that you still must pay what you owe when the bankruptcy proceeding is over. However, you can get this type of debt discharged if you prove to the court that repayment would constitute an undue hardship. The bankruptcy courts in both Texas and New Mexico apply a three-part test to determine if undue hardship exists. The test requires you to prove all of the following:
- Poverty — Given your current income and expenses, you cannot maintain a minimum standard of living if you must repay the loan.
- Persistence — You likely will not be able to repay the debt for the foreseeable future while maintaining a minimum standard of living.
- Good faith — You made a good faith effort to repay the loan.
Managing student debt through Chapter 13 bankruptcy
Even if you don’t qualify for an undue hardship discharge of your student loans, you might be able to use a Chapter 13 bankruptcy to make them easier to pay. In Chapter 13, you pay down your debts under a court-sanctioned debt reorganization plan that takes three to five years to complete and reduces the amount you must pay monthly. Although you will still owe your student debt at the end of the process, you will have less debt overall if you successfully complete the plan. If we represent you in a Chapter 13 bankruptcy, we will use the debt reorganization plan to make your student loan payments as affordable as we reasonably can under the circumstances.
Canceling a student loan
A number of government programs allow you to cancel your student loan without bankruptcy. You might qualify for cancellation if:
- Your school closed before you finished your coursework
- Your school falsely certified your ability to benefit from attending it
- You are disqualified from employment in your field of study
- The school defrauded you
- The loan was fraudulent
- You work in public service or as a full-time teacher in a low-income area
Contact a skilled Texas and New Mexico bankruptcy lawyer for a consultation
If you have trouble repaying your student loan, The Law Offices of Cheryl S. Davis, P.C. provides comprehensive counsel. I advise clients in Texas and New Mexico on a full range of bankruptcy matters. Please call 915-565-9000 or contact me online to schedule an appointment. My office locations are in El Paso and Arlington.