Alachua: 352‑225‑3920 | Broward: 954‑423‑4469
Alachua: 352‑225‑3920 | Broward: 954‑423‑4469
Serving Northern, Middle & Southern Districts Of Florida

Chapter 7: Special Circumstances

Last Updated: Saturday, April 25, 2020

Undue hardship discharge of student loan debt

This firm specializes in bringing a separate lawsuit called an adversary proceeding seeking to discharge student loan debt. While the reality is that it can be very difficult to discharge student loan debt, an experienced bankruptcy litigator utilizing available case law can seek its discharge.

In this type of lawsuit, which is filed during the pendency of your bankruptcy, you must show that there is extreme hardship and that it is not possible for this debt to be repaid.

Cases which have allowed this type of discharge are where the debtor has a medical condition or another factor prevents gainful employment. There are also other cases where student loan debt was discharged. This is an area of bankruptcy law that has been the subject of several recent proposals for change, which we are constantly monitoring.

Please tell us your specific facts and let us determine if the filing of an adversary proceeding is worthwhile for you.

Filing For Bankruptcy Protection And Divorce

While you can file bankruptcy and a divorce at the same time, it is this firm's opinion that generally you should not do so. Filing both together would complicate both matters costing you more in attorney fees and adding unnecessary risk in both cases. The bankruptcy could stop or delay the divorce court from making decisions on property division as your bankruptcy estate would include all of your assets.

This overlap could require the permission of the bankruptcy judge to allow your divorce to proceed, and your Bankruptcy Trustee will likely become involved concerning bankruptcy estate assets. So simultaneous bankruptcy and divorce cases can easily cause delay and added expense in each. Please ask us about your specific case, so we can give you a more complete opinion to avoid such problems.

Reaffirmation Of Debt

Chapter 7 allows secured debt, generally a car or house note, to be treated in one of three ways, as described below.

  • Reaffirm the debt. This means you have decided to keep the car or house and will pay under the original terms of your note;
  • Redeem for value. This option can be used on a car ‑‑ fair market value ‑‑ but not on a house;
  • Surrender the asset. You return the house or car and you owe nothing. However, you do not have to reaffirm debt and you want to talk to us about this issue. You can keep paying your mortgage and stay in your house without reaffirmation. In some instances, this is the preferred approach but is subject to facts of your file. Please ask us about this issue as there is no legal requirement to reaffirm.

Mortgage holders often tell debtors that they must sign a reaffirmation agreement in order to keep their home. This is just not the case. Experienced bankruptcy attorneys, seldom, if ever, recommend or approve reaffirming a mortgage debt. This is different from reaffirmation of a car loan. There are risks which need to be evaluated in deciding to reaffirm.

If you reaffirm a mortgage, you will be personally responsible for the debt even after the bankruptcy. If you do not reaffirm, the mortgage holder may pursue return of the house, but may not collect additional funds from you, personally, in the event that the house is worth less than you owe after you receive your bankruptcy discharge. Therefore, a reaffirmation agreement can mean you owe thousands of dollars after a Chapter 7. Please ask us about this issue.

Please call us to schedule your appointment for a Free Bankruptcy Consultation at one of our two conveniently located bankruptcy law offices either in Fort Lauderdale or Gainesville.