Borrowing student loans in order to attend classes can often increase a student’s earning potential. Unfortunately, if the expected income does not materialize, student loan payments can become a burden.
It can also happen that after leaving college, a New Mexican’s student-loan payments turn out to be higher than expected. Student-loan payments may also become impossible after a personal crisis like a death, unexpected illness, or divorce.
If you face impossible student-loan payments, relief is often possible. For example, you may be eligible for deferment or forbearance that would postpone payments or your lender may offer programs for reduced or renegotiated payments, especially if your income is relatively low or your loans are from the federal government.
There is a myth that student loans are not dischargeable or extinguishable in bankruptcy. While difficult, a debtor can get student loans discharged in bankruptcy if he or she can prove “undue hardship.”
To decide if undue hardship exists, the federal Bankruptcy Court in New Mexico applies a test that requires three things:
· Making the student loan payments on what the person makes and considering other expenses does not allow the person and his dependents even a “minimal” standard of living.
· There are other circumstances making it likely that the poor financial conditions will continue.
· The person has made a good-faith attempt to pay.
Some things that the court may consider relevant to the question of undue hardship include advanced age, disability, inability to earn higher wages, mental illness and more.
There may be other legal options that apply to your situation so be sure to discuss your student-loan debt with a knowledgeable attorney who counsels clients on debt relief and bankruptcy.
In Albuquerque and throughout New Mexico, the law firm of Giddens & Gatton Law,amp; Jacobus has bankruptcy attorneys who offer expert handling of Chapter 7, Chapter 11, Chapter 12 and Chapter 13 bankruptcy cases and can specifically provide advice as to bankruptcy and its alternatives.
We represent many debtors and creditors in Albuquerque, Santa Fe, Las Cruces, Taos, Raton, Farmington, Gallup, Grants, Roswell, Los Lunas, Placitas, Belen and the rest of New Mexico. Contact Giddens & Gatton Law,amp; P.C., at (505) 273-3720 to set up an appointment or visit the firm’s website at giddenslaw.com. Giddens & Gatton Law,amp; P.C., is located at 10400 Academy Road N.E., Suite 350 in Albuquerque, New Mexico.