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Showing that student debt is an undue hardship

Generally speaking, you can't get rid of student loan debt if you declare bankruptcy. However, there is one way to do this, and it's by showing that the debt is an "undue hardship." There are three basic things that have to be shown in order to use this reasoning:

-- First, you have to show that you can't even have a "minimal" standard of living with your debts, expenses and income level. Essentially, the debt is going to put you into poverty. For example, if you owe $500 per month and you only have a part time job that pays you $200 per week, you may be able to show that you realistically can't pay rent, buy food, keep the heat on or pay for other basic necessities if you must pay the $500.

-- Next, you need to show that your situation isn't going to change in the near future. After all, you got the degree so that you could get a higher-paying job. What is the reason that you can't get that job, and why won't you be able to do so at any point going forward? This is to keep people from using bankruptcy to eliminate loans immediately after graduation without even looking for a job, only to land that job after the debt is gone.

-- Finally, you have to show that you've honestly tried to repay the debt. You're doing what you can, but your circumstances make repayment impossible.

The three areas listed above are known as the Brunner test. It's critical to know how this works if trying to get rid of student loan debt in Georgia.

Source: Student Loan Borrower Assistance, "Bankruptcy," accessed June 29, 2016

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