When you are navigating the bankruptcy process, it’s essential to understand the debts not dischargeable in bankruptcy. This includes recent taxes, unpaid domestic support, student loans, HOA assessments, and debts incurred by fraud.
Bankruptcy discharges most unsecured debt. Student loans are not dischargeable, unless you file a lawsuit in the bankruptcy and prove that the debt is causing an undue burden. This may have gotten a little easier based on new guidance.
The government may be implementing a new program mandating employers to automatically deduct student loan payments from a borrower’s paycheck. Is this a good thing? Actually, it may save a debtor money in the long run.
Most Arizona bankruptcy lawyers have to give the unfortunate news that student loans are dischargeable. But the new “Pay-as-You-Earn” program may provide some relief.
A competent Arizona bankruptcy lawyer may try to discharge student loans if they constitute an undue hardship to the debtor. But this is an extremely difficult standard to prove.