Student Loan Update

You may have heard about the Department of Justice instituting a new process for discharging student loans in bankruptcy. While the new guidelines in theory will make it easier to discharge student loans, the unfortunate truth is that only Congress can modify or eliminate the burdensome "undue hardship" requirement. While the new system may help to clarify whether the federal government will contest an adversary proceeding (basically a lawsuit against the student loan holder, which is required if you wish to attempt to discharge student loans), it doesn't change the "undue hardship" standard applied by the Courts. 

It will be some time before these new guidelines are tested in the Courts, so my advice for now is to wait to see how the Courts apply these new guidelines. We will post an update here on the website when the Montana Bankruptcy Court Judge has issued a ruling interpreting these new guidelines. You can also call our office at any time for a free consultation as to how the new guidelines may affect your student loan obligations.