To discharge student loans in bankruptcy under the new guidelines, borrowers must first file an adversary proceeding in bankruptcy court. The adversary proceeding is a lawsuit filed against the lender or servicer of the student loans. In the adversary proceeding, the borrower must prove that repaying the student loans would cause undue hardship.
Once the adversary proceeding is filed, the Department of Education will review the borrower's case. Under the new guidelines, borrowers must complete an attestation form and provide other information to the Department of Education. The Department of Education will then review the information and make a recommendation to the bankruptcy court. If the Department of Education recommends discharge, the bankruptcy court will make the final decision. The attestation form will ask borrowers to provide information about their income, expenses, and assets. The form will also ask borrowers to describe their efforts to repay their student loans. The Department of Education will also consider other information provided by borrowers, such as medical records, tax returns, and letters from creditors.
If the Department of Education recommends discharge, the bankruptcy court will make the final decision. The court will consider all of the information and circumstances of the case before making a decision.
The discharge of student loans in bankruptcy is a complex process. It is important to talk to an attorney who can help you understand the process and your options.
The new guidelines make it easier for borrowers to discharge student loans in bankruptcy by making the process more consistent and transparent. The guidelines also make it easier for borrowers to identify cases where discharge is appropriate.