An increasing number of America’s college graduates are leaving school carrying excessive student loan debt. The growing problem has caught the attention of elected officials and others seeking to find a resolution.

Yet, solutions already exist.

Misconceptions exist about bankruptcy not being an option for all types of student loans. Those assumptions discourage consumers from resolving problems involving money used for post-secondary education. Simply stated, private student loans offered by banks and other private financial institutions may be eligible for discharge or reorganization through Chapter 7 or Chapter 13 filings.

While challenges exist, discharging student loans is possible through Chapter 7 bankruptcy. The individuals responsible for the debt must prove that the payments create severe financial hardships for them and their dependents.

Bankruptcy courts commonly use the Brunner test to determine hardship. Filers must prove that they cannot maintain a minimal standard of living throughout the repayment period. They must also show good faith in trying to pay back the loans.

Filing a petition for determination in addition to the Chapter 7 bankruptcy will trigger the test process. Petitions not submitted initially can still be filed that will reopen the bankruptcy cases.

For those who cannot prove financial hardships, a Chapter 13 route is another option. While the loans are not discharged, the reorganization plan determines the payment amount, not the holder of the student loan. Any amount remaining is still due after the three to five-year time span has elapsed. Options still exist to discharge that debt based on hardships during that time.

As with any type of bankruptcy filing, collection actions must cease. An attorney at the Smith Law Offices, P.C., will handle aspects of your bankruptcy and provide you the peace of mind you need.