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Student loan payments must be attempted for bankruptcy discharge

Many people in Florida take out student loans to pay for an education. Often, these debts may run to hundreds of thousands of dollars. Graduates may discover that the career field does not pay enough to maintain a standard of living while making payments, or that they are not able to find a job in the field.

In a recent U.S. Court of Appeals case, a bankruptcy court ruling in Florida was upheld preventing a man with over $200,000 in student loan debt to discharge it. The judge determined that he did not make a good faith effort to pay the loan. The man had paid on one of his student loans, but once he consolidated those loans with a new creditor, it appears that he ceased making payments.

Student loans are rarely discharged in a bankruptcy. In addition to an effort to make payments, the debtor must prove the current financial situation does not provide enough to repay the loan and maintain a minimal standard of living, the situation is long term, and it is unlikely to improve throughout the repayment period. The man appeared to meet the latter conditions because he is approaching retirement age, is currently unemployed, and is unable to meet the requirements in his field to begin a career.

Anyone who has overwhelming debt may be able to find relief by filing for Chapter 7 bankruptcy. Even when student loans are not discharged, eliminating some sources of debt may make a difference in a person’s quality of life. If you are in need of a fresh financial start, an attorney may be able to help you determine if Chapter 7 is right for you.

Source: Huffington Post, “Law School Debtor Loses Bankruptcy Decision to Discharge His Debt, But Lessons Learned,” Steve Rhode, Aug. 4, 2015

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