Some individuals who owe thousands of dollars in students loans may not know that their debt has been discharged. There is a connection between filing bankruptcy and student loans being discharged of which many borrowers are not aware.

Bankruptcy and Student Loans

Many American students, in order to deal with the mounting costs of college and graduate work, take out loans. They may take out thousands of dollars in loans, relying on the value of their education to enable them to pay the debt down.

Student loans are considered “good debt,” meaning that lenders often expect payment over a longer period of time, the interest rates are generally low and a student loan is considered an “investment” of sorts.

But even so, many young students find it difficult to repay their student loans. Some may even file bankruptcy and student loans, can for some borrowers, be discharged in a bankruptcy filing. It is possible that some borrowers have discharged student loan debt that they do not know about.

U.S. News and World Report reports that some students loans can be discharged in a bankruptcy, but only if they can be proven to cause undue financial hardship. It is true that student loan debt is more difficult to discharge in a bankruptcy than other debt, but it can be discharged if undue financial hardship can be proven.

There are three qualifying factors in order to discharge student loan debt after filing bankruptcy, according to U.S. News. These factors are called the Brunner Test and were implemented after a 1987 decision in federal court.

The first factor that one must prove after bankruptcy and student loans are still a problem is that the borrower cannot maintain the minimal standard of living for himself and dependents based on his current expenses and income.

The second factor in order to prove undue financial hardship in cases of bankruptcy and student loans is that the borrower’s financial situation is not likely to change during the course of the loan’s term.

Last, in order to maintain that the borrower will experience undue financial hardship after bankruptcy, one must show that the borrower has made good faith efforts to repay the loan.

It’s even less widely known that some private loans taken out for education may not even be subject to the undue hardship standard. Debt that was incurred for more than the cost of attendance at a given school, for less than half-time attendance, or for education at a non-accredited school may be dischargeable in bankruptcy just like an unsecured consumer debt.

If a borrower has filed bankruptcy and student loans have been forgiven, some creditors may still try to collect on loans. Bankruptcy is supposed to shield an individual from creditors like this, but it is possible that some creditors may violate federal law in attempting to collect on debt that is no longer owed.

If this occurs, the creditor may be violating the Fair Debt Collection Practices Act (FDCPA). The government does not take this lightly and stiff fines and punishments may be imposed on creditors that violate the FDCPA for those who have filed bankruptcy.

If you have filed bankruptcy and student loans are still on your list of owed debts, you may be able to file legal action. Additionally, if a collector has continued to call or harass you after filing bankruptcy and student loans are no longer attributed to you as debt, you may have a legal case.

Speaking with an experienced attorney about bankruptcy and student loans may result in the legal compensation you deserve.

DISCLAIMER: Debt collection itself is not illegal. However, creditors and debt collection firms collecting on consumer debts must adhere to the FDCPA and respect bankruptcy discharge injunctions. Even though consumer debt attorneys are investigating these companies, their debt collection practices may be legal.