Student loans should be dischargeable in bankruptcy.

Student loans should be dischargeable in bankruptcy. """Many students today depart college and graduate school with mounting debt before beginning their professional careers. In many instances, the total quantity of these student loans can exceed $200,000. Monthly payments for recent graduates can be as high as $1,200 per month. When this payment is combined with the uncertainty of the U.S. and global economies, the situation appears genuinely dire. To get by, many young professionals and members of the working class incur substantial unsecured credit card debt today. They earn significantly less than the average person in their state. Many have purchased residences with current fair market values that are worth tens of thousands of dollars less than their mortgages, and as a result, they frequently fall behind on their mortgage payments. What options do they have to negotiate with their creditors? If these debtors cannot afford to make the enormous payments, negotiation is out of the question. Chapter 7 bankruptcy is their only real salvation.Filing for bankruptcy will provide debtors with some relief. If a person has amassed substantial credit card debt, medical expenses, or even judgments for failure to pay debts, all of these can be written off as unsecured debt. They can always abandon their property if they cannot afford it. Even if the bank is unable to recover its losses and obtains a deficiency judgment against the debtor, this judgment is not as secure as the mortgage and can be stripped. However, many young debtors' greatest concern and most substantial payment is their student loan. What will become of this debt? Currently, student loans are not backed by collateral, but they are regarded as high-priority debt and cannot be discharged so simply. Before a debt can be discharged, it must be designated as a consumer debt. The debt must be for a personal, domestic, or family purpose. For instance, the majority of courts have determined that taxes are not consumer debts under the Bankruptcy Code. Generally speaking, debts incurred in the production of income are not deemed consumer debts. Other courts, including two appellate courts, have adopted the ''profit motive'' standard. Under this criterion, a debt is not a consumer debt if it ''was incurred with profit in mind.'' If a debt is incurred partially for business purposes and partially for personal, family, or domestic purposes, the term ''primarily'' in the definition implies that the debt's classification as a ''consumer debt'' should depend on which purpose predominates. Typically, this determination would depend on the reason why the majority of the funds were obtained.Using this criterion, courts have determined that student loans may or may not be consumer debts, depending in part on the borrower's motivation for obtaining them. The court determined that the designation of a student loan is dependent on the facts; in this case, the classification of a portion of medical school loans as consumer debt was not incorrect. Even if a court determines that a student loan is a consumer debt, this will not be sufficient to justify loan discharge. A court must determine, pursuant to Section 523(a)(8) of the United States Bankruptcy Code, that the student loan qualifies as a """"undue hardship"""" that permits the court to discharge an otherwise nondischargeable priority debt if excluding the debt from discharge would impose an undue hardship on the debtor or the debtor's dependents. Such a judicial decision is discretionary with the bankruptcy judge in determining whether payment of the debt would place the debtor under undue hardship, thereby negating the ''fresh start'' concept of the bankruptcy laws. The most widely used test for evaluating the dischargeability of a student loan under section 523(a)(8) states that the debt is dischargeable if three conditions are met: The debtor cannot maintain, based on current income and expenses, a ''minimal'' standard of living if forced to repay the loans; There are indications that the state of affairs is likely to persist for a significant portion of the repayment period; and The debtor has not been able to repay the debt for at least two years
The debtor made endeavors to repay the loans in good faith.
The Supreme Court has stated that section 523(a)(8) is ''self-executing'' and ''[u]nless the debtor affirmatively obtains a hardship determination, the discharge order will not include a student loan debt'' In other words, student loan debt remains due until the loan's dischargeability is determined. The district of Massachusetts has set a high bar to demonstrate the current criteria used by the Bankruptcy court to discharge a student loan. The debtor was a 32-year-old unmarried woman with multiple sclerosis that relapsed and recurred. Currently, the debtor's monthly income is $1,101. The court determined that the debtor's minimum expenses were greater than her income. To become even marginally solvent, the debtor would have to give up her cell phone and petrol money. In addition, the court determined that the debtor had exerted Herculean efforts to find work she could perform and to work despite confronting formidable physical obstacles. The court determined that the debtor's present condition, which had worsened since she first manifested symptoms, would continue to hinder her ability to find employment that would improve her financial situation. The court's reasoning included the fact that it had witnessed many of the debtor's symptoms firsthand. (First Circuit District of Massachusetts 2007). As further evidence of how precarious a debtor's situation must be, the same court that denied the debtor's motion to discharge her student loan also denied the debtor's motion to discharge her student loan. The court ruled that the educational loans were not dischargeable under 11 U.S.C.S. 523(a)(8 because the debtor's future income prospects were favorable and she could make the minimum payments on her student loan obligations under the Income-Contingent Repayment Plan by slightly reducing her expenses.

" - https://www.affordablecebu.com/