It has recently become possible for lots of people to discharge their student loans in bankruptcy. Walker and Walker is a leader in this kind of work and we have filed 100s of cases to discharge student loans. Many are successful, and if we don’t win then you don’t owe any fees for the student loan discharge.
In late 2024, student loans restarted negative credit reporting. Since the pandemic payment pause, missing or late payments on student loans were not being reported to the credit bureaus. This means that people who weren’t paying their student loans were not getting their credit scores dinged. This changed recently and it has returned to normal so that misssing or late payments are again showing up on credit reports and hurting peoples’ credit scores.
According to the Wall Street Journal (paywall) about 43% of Americans with student loans have not resumed payments on their student loans. If that’s you, then your credit score is probably dropping.
Bankruptcy, either Chapter 7 or Chapter 13 can now discharge federal student loans for lots of people. Here is who qualifies to discharge the student loans:
-
It Has Been 10 or more years since graduation or withdrawal: The borrower must have graduated or withdrawn from their educational program at least 10 years ago.
-
The borrower has made at least 1 payment or has done an income-driven payment playn: The borrower should have made payments on the loans or participated in an income-driven repayment (IDR) plan. An IDR counts even if the payment amount was $0.
-
Financial Inability to Pay: The borrower must demonstrate an inability to afford the monthly student loan payments. This is possible for most people who earn less than $100,000 per year. We make a budget together to make sure you will qualify.
Steps to Pursue Discharge Through Bankruptcy
For borrowers considering bankruptcy as a means to discharge student loan debt, the following steps are essential:
-
See if you will be successful: Walker and Walker will go over your Minnesota case for free BEFORE filing, so we can have a pretty high degree of certainty about the likelihood of sucess. Also, if the student loan discharge isn’t successful, then we don’t charge for the student loan owrk.
-
File for Bankruptcy: Initiate a Chapter 7 or Chapter 13 bankruptcy case, depending on your financial situation. Most people have a 720 credit score 2 years after filing, and you can get a car loan 1 month after bankruptcy, new credit cards 2 months after bankruptcy, and a mortgage only 2 years after bankruptcy.
-
Initiate an Adversary Proceeding: Within the bankruptcy case, file a separate lawsuit known as an adversary proceeding to request the discharge of your student loans.
-
Show the Departments of Education and Justice that you qualify: We make additional paperwork and gather evidence to show them that you qualify.
It’s important to note that while recent guidelines have streamlined this process, seeking advice from a qualified bankruptcy attorney can provide personalized guidance tailored to your circumstances.
Do You Live in Minnesota and Have Student Loans? Call now at (612) 824-4357 for a free consultation!
or schedule online at www.calendly.com/wwattorneys
