Student Loan Debt Bankruptcy Lawyer in California
Educational student loan debt is perhaps the biggest debt problem in the United States today. And those in California are no exception. The problem appears almost daily in the news, and solutions are proposed, but almost nothing gets done.
Student loan debt is not normally dischargeable in bankruptcy, however, there are some instances when relief may be possible. An attorney can help you deal with your student loan options.
I have represented California residents as a lawyer in bankruptcy cases since 1991. If you need assistance with a bankruptcy matter, contact the office today to schedule a consultation.
California Attorney Helping with Student Loans in Bankruptcy
It is extremely difficult, but not impossible, to successfully discharge student loan debt in a bankruptcy proceeding. Usually, debtors remain liable for educational loans after the bankruptcy case has concluded. However, if the debtor can prove that repaying the student loans would constitute an “undue hardship,” as that term is defined by the courts, it may be possible to eliminate, reduce, or renegotiate the loan terms to achieve a lower rate or payment amount. The undue hardship standard is complex and will be evaluated on a case-by-case basis by the courts, and requires going through a trial.
Typically, the best option on federal student loans is to partake in the Income Based Repayment (“IBR”) options offered and that is usually a prerequisite to attempting an undue hardship discharge in bankruptcy.
Some private student loans are deemed to be “nonqualified” and, therefore, dischargeable in bankruptcy. These are discussed in more detail in the FAQs section, below.
Even where private student loans are not dischargeable, bankruptcy Chapter 13 provides a way to stop collection actions and control the payment amounts. Contact me today to learn more about your options.
I advise my clients on the options for dealing with student loans, whether through a bankruptcy case or outside of it.
Los Angeles Attorney Handling Student Loan Debt in Bankruptcy
In Los Angeles, as well as the rest of the country, student loan debt has become its own “pandemic”.
I am Mark J. Markus, an attorney that has advised and represented clients in bankruptcy cases to help deal with student loan debts and other debt problems since 1991 in the Greater Los Angeles Area. I am a Certified Specialist in Bankruptcy Law by the State Bar of California Board of Legal Specialization.
Open communication is a hallmark of my representation and I promptly respond to client questions. All work is done by me, a bankruptcy lawyer, in my Burbank, Los Angeles office. No paralegals or assistants.
Bankruptcy cases are only filed by my office after weighing all alternatives and analysis of the pros and cons of filing.
My firm serves all cities and counties in California, including counties of Los Angeles, Orange, Santa Barbara, San Diego, Riverside, Fresno, Sacramento, San Bernardino, Ventura, San Luis Obispo, Tulare, Contra Costa, Shasta, Marin, Alameda, Kern, and San Francisco and cities including Burbank, Glendale, Sylmar, Panorama City, Simi Valley, San Fernando Valley, Irvine, Santa Clarita, Oxnard, Huntington Beach, Ontario, Rancho Cucamonga, Corona, Torrance, Agoura, Long Beach, San Fernando, Van Nuys, Sherman Oaks, North Hollywood, Anaheim, Hollywood, Riverside, San Bernardino, Lancaster, Palmdale, Pasadena, and many more.
Frequently Asked Questions (FAQ’S) About Student Loan Debt In California Bankruptcy
What is Brunner and the Requirements for Undue Hardship Discharge of Student Loans in Bankruptcy?
The so-called “Brunner Test”, based on a court ruling that set out the elements, is difficult to satisfy.
To obtain a discharge based on undue hardship in the Ninth Circuit (which includes California) you must prove all of the following:
- That you cannot maintain, based on current income and expenses, a ‘minimal’ standard of living for yourself and your dependents if forced to repay the loans; (This is usually the easiest prong to satisfy.)
- that additional circumstances exist indicating that this state of financial affairs is likely to persist for a significant portion of the repayment period of the student loans; and,
- that you made good faith effort to repay the loans. This does not just include making payments on the loans. It requires doing things over time such as making efforts to increase your income (which includes going back to school to get additional degrees or experience), consolidating loans, entering into an “Income Based Repayment” plan, and other similar efforts.
Courts are trending towards loosening up the above requirements, but it is still a difficult burden to meet, and requires going through a trial. This can obviously get fairly expensive.
What Happens to Private Student Loans in Bankruptcy?
Like any other student loan, the debt is not subject to the bankruptcy discharge, unless you can satisfy the undue hardship criteria referenced above.
However, there are increasing instances of courts finding certain private loans to be “nonqualified”. This means that they are not considered student, or educational, loans. This typically occurs when the following situations are present:
- Loans where the loan amount was higher than the cost of attendance (such as tuition, books, room, and board), which can occur when a loan is paid directly to a consumer.
- Loans to pay for education at places that are not eligible for Title IV funding such as unaccredited colleges, a school in a foreign country, or unaccredited training and trade certificate programs.
- Loans made to cover fees and living expenses incurred while studying for the bar exam or other professional exams.
- Loans made to cover fees, living expenses, and moving costs associated with medical or dental residency.
- Loans to a student attending school less than half-time.
If you have one of the above situations, you may be able to discharge that loan debt without having to prove the Brunner undue hardship elements.