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Can You Erase Student Loan Debts via Bankruptcy in Iowa?

On Behalf of | Nov 1, 2019 | Bankruptcy

Many of those who file for bankruptcy in Council Bluffs and other parts of Iowa wonder, “Can I file bankruptcy for my student loans?” The answer may be yes but doing so would require you to prove “undue hardship” for student loans.

According to NBC News, one in five adult Americans has student loan debt. That is as many as 44.7 million Americans.

To prove that repaying student loans poses an undue hardship and get more information on how you can discharge your college debts, talk to a Council Bluffs bankruptcy attorney from Telpner Peterson Law Firm, LLP.

Can You Erase Your Student Loans Through a Bankruptcy Filing?

It is a common misconception among bankruptcy filers in Iowa that they cannot wipe out their student loans. It is possible to discharge both federal and private student loans by filing for bankruptcy.

However, as mentioned earlier, doing so requires you to prove that repaying college debts poses an “undue hardship.” Also, you have to file an extra lawsuit to specifically target student loans through a bankruptcy filing in Iowa.

Needless to say, discharging student loans in an Iowa bankruptcy is more complicated than erasing other debts. Because bankruptcy has a tremendous impact on many aspects of your life, filing for bankruptcy just to erase student loan debt is not a decision to take lightly.

Should You Discharge Student Loan Debt Through Bankruptcy?

An estimated 63 percent of all college graduates in Iowa have student loan debt when they receive their diploma.

Yes, filing for bankruptcy can stop collection calls and garnishments, but doing so carries a series of consequences.

You may want to consider filing bankruptcy if:

  • You have exhausted all other payment options, including a loan forgiveness program and income-driven repayment;
  • You are past-due on your student loans; and
  • You have no options to get out of default.

Proving ‘Undue Hardship’ in a Student Loan Bankruptcy Filing

Discharging student loan debt requires you to prove that repayment poses an undue hardship. Given that the total amount of student loan debt in the United States reached $1.47 trillion at the end of 2018 – more than credit cards or auto loans, according to Forbes – it is not surprising why Americans struggle with repaying college debts.

But do your circumstances meet the “undue hardship” standard to wipe out all college debts? That depends on whether you can prove that:

  • Repaying student loan would make it impossible to maintain a minimal standard of living based on your current income and expenses;
  • It is likely that your financial situation will remain the same until the end of or for a significant portion of the remaining loan period; and
  • You have made substantial efforts to repay your college debts.

Consult a Council Bluffs student loans bankruptcy attorney to collect the necessary evidence to prove that your case meets the “undue hardship” standard. Contact Telpner Peterson Law Firm, LLP, to discuss your particular situation. Call at 712-309-3738.