Your Student Loan Debt and Bankruptcy Declarations

You may be having problems preserving your financial situation and are looking for relief by declaring bankruptcy, but certain student loans cannot be eliminated by the bankruptcy procedure. And it will not make much of a difference whether the student is still in school or has just recently been graduated.New Laws and RegulationsIn concert with the latest laws and statutes put in place by the federal government concerning bankruptcy, there are now new and extremely stringent rules regarding restrictions on granting relief from certain federal, state, and private lender student financial support. The greater degree of these dramatic amendments came about in 1998 along with other Title 11 improvements within the federal courts systems.More Restrictions ApplyAccording to these new rulings, individuals may not be able to have their student loans forgiven along with their other debts. These rulings were amended and intensified by the Congress in 2005. It is now practically impossible for persons to get relief from student loan debts. Right now, there may be a little squeeze room that certain individuals may be able to avail themselves when seeking relief. This procedure would require that a formal declaration be made in court before a judge that continuance of the student debt would cause serious difficulty or harm to continue and that the request for relief was not a result of any wrong doing on the part of the declarer.Eligible CandidatesIf would become incumbent on the candidate for such a declaration to show the circumstances as such that continuance of the debt would only allow the declarer and his family to subsist only at the lowest standard of living as described in federal legislation for other purposes. It would also be incumbent on the declarer to show that he or she does not have any way to ameliorate this situation any time in the near future.The Courts DecideIf the courts do not or cannot discern that an excessive hardship is being placed on the candidate and the immediate family, the student loans may not be discharged along with the candidates other bad debts. It is often determined that enough disposable income exists to cover the loans without harming the well being of the candidate and the immediate family.Other OptionsAnother option exists by which the courts can reclassify academic loans along with other financial support funds whenever an individual applies for a Chapter 13 Bankruptcy. This option enables the supplicant to retain more of the disposable earnings to pay the outstanding debts, and that would include student loans. This is brought about by actually lowering the total obligation behind such not guaranteed financial debt.The Bottom LineIn the event that an individual must use part of his or her income to cover the repayment of student loans, the highest amount which could be suspended according to the aforementioned Title 11, would be 10% of the individual gross income. Even though individuals find themselves with financial problems when it comes to the repayment of student loans, the ability to get elimination or reduction of student loan is practically impossible under this new legislation.