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Bankruptcy and Student Loans

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Bankruptcy: Emily and the Enormous Amount of Student Loans

Emily graduated from a very prestigious college and was in her second year of medical school. Emily's parents did not have the resources to help her pay for college. For the past six years, Emily survived using student loans and credit cards. Emily's latest student loan statement read that she owed over $350,000 in student loan debt. Emily attended a bankruptcy seminar. She decided to file a voluntary Chapter 7 petition. Emily's attorney said that her credit card debt would be discharged. The attorney was not sure about Emily's student loan debt. Emily received several deferments and forbearances on the loans but ultimately defaulted before making any payments. Under the federal bankruptcy laws, is Emily entitled to a discharge on her student loans?

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Student loans can only be discharged in a bankruptcy if you can prove that the student loan payments create an undue hardship, as defined by law, for you, your family, or your dependents. Student loans are very difficult to have discharged in a bankruptcy because if it ...

Solution Summary

This solution discusses the issues, facts, and laws involved with Emily and the Enormous Amount of Student Loans scenario. All relevant facts and correct conclusions are presented in the solution.