Can Flemington, New Jersey Residents Discharge Student Loans in Bankruptcy?

The pause in collection of federally-backed loans ended on December 31, 2022. Collectors will start demanding money right after the New Year.

Federally guaranteed student loans may be able to be discharged or cancelled in bankruptcy. New Jersey student borrowers who need to cancel student loans backed by the U.S. Department of Education now have more guidance from the Department of Justice.

You still have to show “undue hardship” so a judge can order your student loan to be cancelled. The very tough “undue hardship” standard you previously needed to prove to end your obligation to repay the federally backed student loan has been relaxed. These rules do not yet apply to private student loans. For private loans, Bankruptcy Judges must require that you prove “undue hardship” under the old, not yet relaxed standards.

There is a lot you must help your New Jersey bankruptcy lawyer prove in order to secure a discharge of the student loan. We help our Hunterdon, Somerset and Warren County clients collect and organize the required information. 

The government has set clear, very transparent expectations that it wants you to meet if you are no longer able to pay your federally guaranteed student loans. There is a 15 page information form we can help you complete and provide to the federal government and the court. Here is a link to the form being used in one Bankruptcy Court:

Student Loan Discharge Guidance – Attestation Form

The federal government wants to understand your present financial circumstances, whether your inability to repay will continue and whether your inability to repay is in good faith so they can make a decision as to the dischargeability of your student loans.

It is a lot of effort but it is worth it. Give our office a call today to schedule a free 1 hour, no obligation consultation to discuss your options.