How Do You File for Undue Hardship Discharge of Student Loans in New Jersey

How to File for Student Loan Debt Discharge in Bankruptcy

Unlike other debts, discharging student loans requires more than just filing for bankruptcy. So it’s important to seek assistance from a qualified personal bankruptcy attorney before you initiate the process.

Here’s how to file for an undue hardship discharge of student loans in New Jersey:

Filing Bankruptcy
To discharge student loan debt, you must first file bankruptcy. Depending on your situation, you can choose between Chapter 7 or Chapter 13 bankruptcy.

• Chapter 7 involves selling your nonexempt assets, such as cash, bank accounts, and luxury items, to repay creditors. After that, the court will discharge the rest of your unsecured debt. Student debt, however, is not automatically discharged.
• Chapter 13 allows you to reorganize your debt through a repayment plan so you can repay a portion or all of your debt within the specified period.

Initiating an Adversary Proceeding
Following your bankruptcy filing, you must initiate an adversary proceeding with the Bankruptcy Court against the U.S. Department of Education or the private lender of your loan.

To initiate the proceeding, you must fill out and file the adversary proceeding cover sheet and a Complaint to Determine Dischargeability of Student Loan Debt.

Submitting Attestation Form (for federal student loans)
The Attestation Form includes information regarding your income and expenses. This form is used to determine whether your expenses outweigh your income and demonstrate your inability to repay your student loan. You should file the attestation form with your local Assistant United States Attorney (AUSA), the representative of the Department of Education in the case.

If your attestation form proves undue hardship, the AUSA will recommend a full or partial discharge of your student loan debt to the court. A positive AUSA recommendation may expedite the process.

What Is the Process for Filing for an Undue Hardship Discharge of Student Loans in New Jersey?

Filing for an undue hardship discharge of student loans in New Jersey involves a legal process where the borrower must establish that paying back the student loans would create undue hardship. To file for undue hardship, the borrower initiates a claim through a bankruptcy court and must pass the undue hardship test.

The undue hardship test typically requires detailed documentation provided by the borrower, showing that they cannot maintain a minimal standard of living if required to pay back the loans. This involves a thorough examination of the borrower’s income, expense, and overall financial resources. Factors considered include living unusually high costs, unusually high debts, and other financial obligations that might impose significant difficulty on the borrower’s life.

In determining whether undue hardship exists, courts look at the borrower’s total income and the specific circumstances of their household. For example, if the borrower’s family includes a person with disabilities, the reasonable accommodation needed may increase the financial burden, supporting a claim of undue hardship. Courts often assess these claims on a case-by-case basis, considering the employer’s ability to support such accommodations without undue hardship to the employer’s business.

The determination of undue hardship involves an analysis of whether the borrower has made good faith efforts to repay the loans. This includes examining attempts to obtain a better-paying job, cut down on unnecessary expenses, and maximize income from all possible sources.

If a court finds that undue hardship exists, it can grant a full or partial discharge of the student loans. This determination, known as an undue hardship determination, frees the borrower from the obligation to repay the loans under the terms originally agreed upon.

To successfully navigate this complex process, it is advisable to consult with a legal professional who understands the nuances of bankruptcy law and the specific enforcement guidance related to the Disabilities Act. This guidance helps ensure that all relevant factors, such as family size, total household income, and specific hardships, are accurately accounted for in the undue hardship determination.

Getting your student loans discharged in bankruptcy may be challenging, but definitely not impossible. Our experienced bankruptcy lawyers at Law Offices of Wenarsky and Goldstein, LLC, provide comprehensive support throughout this complex process. We can thoroughly analyze your financial situation to determine if you meet the undue hardship criteria and help gather necessary documentation proving your current and future inability to repay.

Our bankruptcy attorneys skillfully prepare and file all required bankruptcy paperwork, including the critical adversary proceeding documents. We represent you during all court proceedings, effectively advocating your case before the bankruptcy judge. For federal student loans, we handle negotiations with Assistant United States Attorneys to potentially secure favorable recommendations.

With decades of combined experience in bankruptcy law, our team understands New Jersey courts’ interpretations of the Brunner test and the latest Department of Justice guidance, significantly improving your chances of successful discharge.

Contact us today to schedule a consultation.