What Constitutes an "Undue Hardship" in Bankruptcy

Individuals who face mounting debts such as student loans may qualify to have these debts discharged after filing for bankruptcy. Being absolved of these financial obligations can occur only if the debtor proves that the debt will result in undue hardship for both him and his dependents. As any bankruptcy attorney will attest, proving your undue hardship rests upon three key factors:

1. A debtor cannot maintain a minimal standard of living based on his current income and expenses. If a judge decides to release you from your debt, you must first prove that your attempt to repay it will result in a severe negative impact to your quality of life. Only if evidence that supports this claim is provided will the court then consider the remaining undue hardship qualifications.

2. Current circumstances indicate that for the duration of the repayment period, or a significant portion of it, the debtor will continue to experience hardship if forced to maintain his debt. Many bankruptcy lawyers consider this to be the hardest factor to prove. Basically, a judge must be persuaded that, over the duration of your repayment period, you will not experience a significant change in lifestyle or income level that will allow you to more easily resolve your debt. However, if you can successfully argue this point, you have only one more obstacle to overcome in proving your undue hardship.

3. The debtor has made a good-faith effort to repay his debt. Have you tried to pay off your debt? Can you show the judge proof of your past efforts to maintain and reduce your debt? If so, you have effectively made your case for undue hardship. At this point, should the judge decide in your favor, you would be released from all further responsibilities in paying off your debt.

Do you qualify for undue hardship? The bankruptcy law firm of Cutler & Associates, Ltd. can help you to determine whether you are eligible for having some or all of your debt discharged after declaring bankruptcy.