Current estimates place the total amount of student loan debt at over $1.2 trillion, with over 7 million borrowers in default. The average amount owed by a recent college graduate is between $26,900 and $32,600, for public and private institutions, respectively. While there are numerous repayment plans, the average monthly payment for a student-loan borrower is $200 and $300. For many former students who entered college or university with high hopes of landing a high-paying job, only to have those hopes dashed by the current job market, student loan debt is an untenable expense.

The benefit of filing for bankruptcy is to wipe out debt and begin creating a new financial future. However, not all debt is dischargeable through a Georgia bankruptcy. In fact, the general rule is that student loan debt, whether it is held by a public or private lender, is not dischargeable through either a Chapter 7 or a Chapter 13 bankruptcy.

While most filers will not be able to free themselves of student debt by filing for bankruptcy, there is an exception to this general rule. If a filer can establish that repaying their student loans would cause them to suffer an “undue hardship” then courts may get rid of student loan debt. Georgia courts consider the following factors when considering whether paying student loan debt poses an undue hardship on a filer:

  • Whether the filer can maintain their current standard of living while making payments on the student loan debt;
  • The presence of any additional circumstances that are likely to persist throughout much of the repayment period and adversely impact the filer’s ability to pay back the loans; and
  • Whether the filer has made a good-faith effort to repay the loans up to the point of filing for bankruptcy

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