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New York Attorney Stephen B. Kass

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January 9, 2012 By Stephen Kass

Getting out of Student Loan Debt

On May 3, 2010, US News reported in “New Hope for Debtors Struggling With Student Loans” that most Americans who use loans to pay for a university degree, obtain jobs after graduation, to pay off debts, but economic troubles for the past few years have prolonged unemployment causing for recent college graduates.

Thousands of graduates who have studied hard or passed professional exams, have not been able to make their student loan payments. Over 20% of students who took out private loans in the last several years to pay for tuition have defaulted. Some people have gone to school expecting high paying jobs only to end up with hourly wages for jobs they could have gotten without the education.

Around 7% of students who took federal student loans in 2007 have defaulted. People in Washington DC are advocating reform to allow individuals who file bankruptcy to get out of their private educational loans. Currently, when someone is not able to pay back student loans, bankruptcy may not be the solution. The individual can file bankruptcy to discharge other debt besides student loans to free up cash, but student loans are not normally dischargeable debt.

The Department of Education is often an opposing party in a bankruptcy case when someone wants to eliminate student loans. Where someone can get student loans cancelled, the indivdual needs to establish undue hardship.

To show undue hardship, a person lets the court and interested parties in a bankruptcy case know how the student loans affect the debtor, family, or dependents. It is difficult to show undue hardship unless a person is physically not able to work and there is no chance of the person generating income. The individual may show the person is physically unable to work by indicating the only income is welfare or social security. If the individual has mental abilities, but physical disabilities, the court may ask how the disabilities, keep the person from working.

Someone cannot get student loans discharged in order to apply for financial aid for a graduate degree. The individual might argue economic loss in not having the peace of mind of the student loan debt discharged, but if the person has mental abilities to go to graduate school, the person is able to work. This ruins the defense of not being able to generate income to pay off the debt.

Contact an experienced New York bankruptcy attorney for counseling on bankruptcy proceedings.

Filed Under: Bankruptcy

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I highly recommend using Steve Kass as an attorney. I had a serious issue with the IRS involving real property, a company I built and sold, and multiple years of taxes which were unfairly and incorrectly assigned to me and had been hanging over my head because my efforts to negotiate...

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Mr. Kass and his professional office staff helped me through every step of the way which without his expert guidance would not have been successful. Mr. Kass was able to a access my situation quickly and advise me. I highly highly recommend making an appointment with Mr. Kass

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I consider myself very lucky to have found Stephen B. Kass last year. We were drowning in credit card debt and were on the verge of filing bankruptcy. Mr. Kass was able to negotiate with all of our creditors and reduce the balances SIGNIFICANTLY. Within one year we are debt free

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Stephen and legal staff provided superb, accurate, and detailed financial analysis. Stephen has an exquisite knowledge of financial planning and tax law, and was able to make tailored, individualized recommendations that have helped me tremedously with regard to long-term financial planning and resolution of tax issues. Office staff are skilled

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I had a great experience with Stephen Kass. He took legally complicated case from another attorney and resolved it. Years later, when his assistance was needed, he responded right away, remembering every detail of the case. He is an expert in his field and great person to work with.

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