Did the Justice Department Just Make It Easier to Discharge Student Loan Debt Through Bankruptcy?

A statute of a blindfolded woman holding up the scales of justice.

Late last year, the Department of Justice and the Department of Education unveiled a streamlined process to assist borrowers in having their federal student loans discharged through bankruptcy proceedings.

Do These Changes Help Make It Easier to Discharge Student Loan Debt Through Bankruptcy?

Prior to these changes, the U.S Congress had set a very high standard for discharging student loan debt through bankruptcy. This standard required borrowers to prove they would face "undue hardship" if they were not allowed to discharge their student loan debt through bankruptcy.

This new process, which includes clear guidelines from Justice Department attorneys, is much simpler. It has made it easier for those who didn't believe they qualified for a discharge of their student loans through bankruptcy to qualify and secure the financial relief they need.

The biggest change to the process for determining if borrowers should have their student loans discharged through bankruptcy involves the system used to determine undue hardship. A new system has been devised to assist courts in their decision-making regarding the determination of undue hardship. The system involves evaluating past and present financial circumstances, leveraging Department of Education data, and having the borrower complete an attestation form.

This new system has enabled the Justice Department to analyze multiple factors concerning a borrower’s debts and potential for experiencing undue hardship. The system has led to the Justice Department assessing debts more accurately than before, which has helped them better recognize when a discharge of a borrower’s student loan debt is warranted.

By providing greater opportunities for people to discharge student loans through bankruptcy, this initiative has lessened burdens on those seeking debt relief.

Are You Struggling with Overwhelming Student Loan Debt?

Is your financial future feeling uncertain due to mounting student loan debt? Wadhwani & Shanfeld is here to help. With our expertise, you can learn the best strategies for regaining control of your finances. We've already helped over 25,000 people get back on their feet. Let us use that experience for your benefit today.

Call us at (800) 996-9932 or contact us online today to schedule a free consultation with our experienced bankruptcy attorneys in Southern California.

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