Filling Student Bankruptcy in College
By: Daniel Gershburg
While I have written about this topic before, I nevertheless wanted to write a post to make clear two certain points.
The first point is that, with very very very limited exceptions, student loan debt is NOT dischargeable. I have been receiving numerous emails from students wanting to know if they can discharge their student loan debt and get a “fresh start” if they do not find a “decent” paying job when they finish college. The answer is typically no. You would really need make to showing of an undue hardship in order to qualify to discharge your student loan debt. Bank on the fact that barring a very severe financial crisis you will likely not be able to show such a hardship. The lesson, as cliche as it sounds, is to never borrow more than you need. I say this from experience. My debt in law school was tremendous and looking back I could have been more responsible with managing the law school debt. Do not put yourself in the same position.
The second issue I wanted to touch upon is college student Bankruptcy fraud. Its more of a serious issue than you may think. In previous posts I have always said that Bankruptcy Trustees and credit card companies are not involved in some vast conspiracy to stop you from filing Bankruptcy forever. Usually they will not even bother to file any claims in Bankruptcy court. However, if they see suspicious activity they will in fact retain counsel and cause problems. What would suspicious activity classify as? That would be purchasing a flat screen tv for $2000 immediately prior to filing for Bankruptcy. Or going to Europe with your friends on the old Amex about 2 months before you file for Bankruptcy. In other words it is debt that you have no intention, or could not possibly pay back, when you made the purchase. It’s a pretty stringent standard but one to absolutely keep in mind.
Filing for Bankruptcy claims in college is the same as filing for Bankruptcy anywhere else. So long as you really hit a tough patch in life, you should be ok. However, if you are doing this to escape legitimate debts or you racked up the card and now think you’re going to get away free and clear, its best to think again.
Daniel Gershburg Esq., is a Bankruptcy & Real Estate attorney serving a diverse clients in Brooklyn, Queens, Manhattan, Staten Island, Long Island and Westchester. Mr. Gershburg has given lectures and presentations to both attorneys and the community at large surrounding Bankruptcy and financial advocacy in the New York City area. Currently he is working on his first book giving practical advice about repairing troubled credit and how to improve credit post Bankruptcy