Can You File Bankruptcy For Student Loans Or Medical Debts?
Millions of Americans struggle with crushing debt. Two of the most common scenarios are unaffordable college loan payments and massive medical bills after a health crisis in the family.
Many families overwhelmed by medical debt are able to get relief through Chapter 7 bankruptcy. Student loans are generally not dischargeable in bankruptcy unless paying back the loans would cause undue hardship. Attorney Adam Roose can determine if you qualify for relief from medical bills, college loans and other types of debt.
Bankruptcy And Medical Bills
Medical treatment for a serious injury or illness adds up quickly, especially for an extended hospital stay. Soon the bills start rolling in, and it isn’t long before providers turn you over to a collection agency. If you don’t have health insurance, you could be on the hook for tens of thousands of dollars. Even for families with health insurance, the high deductibles, co-pays and out-of-pocket expenses may represent thousands of dollars they don’t have.
- In Chapter 7 bankruptcy, unsecured debts can be discharged. This includes most medical bills. If you qualify under the income criteria, those debts are erased and you can get a fresh financial start.
- If you are not eligible for Chapter 7 bankruptcy, you can still get relief from medical debt through Chapter 13 bankruptcy. You repay part of your debts over three to five years and then any remainder you still owe to medical providers is forgiven.
Filing for bankruptcy provides immediate protection from creditors, including harassment, wage garnishment, repossession and foreclosure.
Bankruptcy And Student Loans
The cost of a college education has skyrocketed. Many graduates are not able to keep up with the loan payments, even if they are working one or more jobs. Student loans (private or federally guaranteed) are typically not dischargeable in a Chapter 7 bankruptcy.
Including student loans in a bankruptcy filing requires proof that paying them back would cause undue hardship. For example, the court may apply all three factors of the Brunner test:
- You are not able to maintain a minimal standard of living for your family while paying your college loans.
- Your financial situation is unlikely to improve in the foreseeable future.
- You have shown good faith effort by making some payments or partial payments.
Your chances of discharging student debt increase if you have struggled for years with student loans or if you have health issues that prevent you from ever catching up. You need the guidance of an experienced bankruptcy attorney to have any hope of walking away from college debt.
Bankruptcy May Still Be The Answer
Even if you do not qualify to discharge student loans, bankruptcy can eliminate other debts such as credit cards, personal loans and utility bills. Would that free up money to pay down your college debt?
At Roose Law PLC, we look at your total financial picture to help you find debt solutions. Call 248-331-1200 to arrange a free consultation at one of our three locations in eastern Michigan.
We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.