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How To Prove Undue Hardship For Student Loans?

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Good budget management can be difficult if you are trying to pay your other student debts while paying your student loans. However, if you prove undue hardship for student loans, it is possible that your student loans may be debited with bankruptcy, albeit difficult. To achieve this, you need to demonstrate that repayment of your loans is a continuing financial challenge and that you have good intentions to repay your loans before you apply for bankruptcy. If you can do so, the bankruptcy court may pay all or part of your loan debt.

Steps to prove undue hardship for student loans

To prove undue hardship for student loans, you need to follow these steps;

  • Establishing Financial Hardship

1- Create a bare-bones household budget.

2- Compile information about your dependents.

3- Justify expenses that are keeping you from paying back your student loans.

4- Produce evidence that you can’t make substantially more money.

5- Show proof that you receive government benefits.

  • Demonstrating the Persistence of Your Hardship

1- Gather financial documents to show your hardship will continue.

2- Provide evidence of a disability or ongoing medical condition.

3- Show that you’ve tried and failed to increase your income.

  • Showing a Good-Faith Effort to Repay

1- Talk to your loan servicer about more affordable payment options.

2- Gather all communications you’ve had with your loan servicer.

3- Find receipts or bank statements for all payments you’ve made.

  • Establishing Financial Hardship

Create a bare-bones household budget;

The first thing you need to do to prove undue hardship for student loans is to create a bare-bones householdĀ  budget. Even if you have to continue your life with this budget, you will still have to show that you are still unable to pay your student loans, even if you do not make any optional expenses. The bare-bones household budget should be a figure that coincides with the income level of poverty.

For example; The poverty level income for a single-person home in 2019 is $ 12490. This number may change as the number of people increases. If you are married and have two children, your household income should be a maximum of $ 25750.

Look for the cheapest home and smallest home you can find in your area to build a bare-bone household budget. To prove undue hardship for student loans, if you don’t have children and are married, you can look for a studio or a one-bedroom apartment instead of a big house. Instead of eating out or spending money on junk food, you can create a low-cost list of meals at home. Get rid of your entertainment costs, including cable or video streaming subscriptions. If you have more than one car, you must create a budget based on one car or based on public transport.

Compile information about your dependents;

It will be important if you have children or other dependents. List their age, whether they have a disability or special needs, information about education, health insurance costs, and other similar information. The judge will consider them when deciding whether you can prove undue hardship for student loans.

Justify expenses that are keeping you from paying back your student loans;

Depending on your situation and lifestyle, you may have expenses that do not fit the bare-bones household budget. List these expenditures to prove undue hardship for student loans and explain why they are necessary. For example; if you have a child attending private school, show that you are trying to get scholarship and other financial aid to help the judge with education and other expenses. If you are working from home and need an internet connection, prove that it is mandatory for business and not for entertainment.

Produce evidence that you can’t make substantially more money;

Voluntary employment is not enough to prove undue hardship for student loans. You must prove that you earn the most money under your circumstances. For example, if you were working in a part-time job, the judge said, ‘You could pay student loans by working in a full-time job.’ It can say.

Show proof that you receive government benefits;

If you receive any help from the state, the judge is more likely to admit that you suffered financially. But, you’ll still have to demonstrate that your situation is not temporary, but likely to continue for the foreseeable future.

  • Demonstrating the Persistence of Your Hardship

Gather financial documents to show your hardship will continue;

In order to prove undue hardship for student loans, it is not enough to prove that student loans cause more financial distress than necessary. You must also prove that this is consistent. For example, you can use tax returns that show that income has not changed in the last ten years.

Provide evidence of a disability or ongoing medical condition;

If you or anyone in your family has a chronic medical condition or disability that requires ongoing treatment, you can use it to prove undue hardship for student loans. This can be very useful for you.

Show that you’ve tried and failed to increase your income;

You do not need to end your career to get rid of the obligation of student loans. However, in order to prove undue hardship for student loans, you need to prove that you are trying to enter higher paid jobs but have not succeeded.

Showing a Good-Faith Effort to Repay

Talk to your loan servicer about more affordable payment options;

Your credit specialist can reduce or eliminate your student payments for short-term. Even if you haven’t done so, you’ve tried all the options to show that you’re in good faith.

Gather all communications you’ve had with your loan servicer;

Contacting your credit provider proves your goodwill. For example, there may be emails or letters indicating that you have spoken to your credit provider about your credit or payment options.

Find receipts or bank statements for all payments you’ve made;

You must go back as far as possible while proving your payments. If you want to prove undue hardship for student loans, you should pay particular attention to your late payments and information about why these payments are made late. It is important that you prove them. This means that you take your credits seriously and are working hard to pay.

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