Student Loan Relief Is Rarely Found in Bankruptcy Court

Bankruptcy provides an opportunity for those in debt to get a fresh start, but it does not provide federal student loan relief to the average debtor. With student loan debt at the top of many people's financial woes a trip to court will not correct this particular debt. Not to say that it would never be written off in bankruptcy court but it is hard to prove the hardship.

Before 1976, student loans were discharged in bankruptcy. During that year the laws were changed so that government loans and non-profit colleges and universities could not be part of bankruptcy in the first five years of payments or without proof of undue hardship. In 1984 changes were made to include private student loans as well.

Once 2005 hit, more changes were passed and no student loans, private or federal could be part of bankruptcy court at any time unless 'undue hardship' was proven. In order to prove that the monthly payment creates undue hardship, the debtor will have to prove that a sever disability affects their ability to earn wages. In other words, if you are in any condition to work, you will not find any kind of student loan relief plan inside bankruptcy court.

So what does a person do with their loan debt? In order to find student loan relief help, they will work through the task to find out what kinds of programs are available to them. Once they know, they will then then comb through the complex forms to decipher what kind of relief is possible. Usually at this point, most people have given up trying. Federal debt relief is plentiful, but the process is oftentimes too daunting a task for working individuals. Who has time to sort through qualifying information or sitting on hold trying to get an answer from a government help line? Most people do not have the time needed to accomplish what needs to get done. At this point, their debt problems get put on the back burner and fester.

Dealing with the problem later means working with a growing debt. It is best to have a plan even if it means placing student loan debt into deferment or forbearance. A plan of action to relieve student loan debt is what paid services are doing. Once your loans qualify into student loan relief programs, the unknown is not a concern. You will have something to work towards while paying less towards the loans payments each month. Paying a few hundred dollars for a service to save tens of thousands is a smart financial decision.

It takes a proactive approach to debt problems to turn them in the right direction. Bankruptcy is not a solution for most people. Loan consolidation, income-based repayment plans and forgiveness programs are great examples of what could happen to your student loan debt if you choose to not avoid the problem. Take the initiative and set up a free consultation with a loan servicing company so you can see what relief options you may qualify for. As the debtor, it is your responsibility to find student loan relief opportunities as they won't come find you.

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