In unfortunate financial times, anyone in the United States may have to turn to bankruptcy under strain of crippling debt. While a rough process, it helps many get a clean slate, albeit with a lasting mark on their credit. However, for a long time, even when faced with extreme debt, student loans have haunted many well past the bankruptcy process.
 
It’s a severe struggle when one has nothing but still is expected to pay back tens of thousands in loan debt. But, there might be some hope for individuals with extreme circumstances. In other words, loans could be discharged under certain conditions.
 
65-year-old Robert Murphy is one such example, who took out multiple PLUS loans to help pay for family college. PLUS-loans work like federal loans, save a guardian is responsible for the debt amount instead of the student.
 
Unfortunately, this left Murphy and his wife, a teacher’s aide, with over $200,000 in debt. Losing work and relying on their $13,000 yearly salary, this tremendous debt is simply impossible for him to pay off.
 
Over the course of four years, Murphy has dealt with litigation from both the Department of Education and Education Credit Management, soon to have his case resolved in May. Law experts say this is because the Department of Education did not see a favorable outcome, and pursuing the case further would not yield much.
 
This all occurs because of what’s called “undue hardship.” In order for a student to get their loan discharged, they must prove continued payment of it would cause them overwhelming financial stress. However, this process is handled in court by mentioned litigation, and in fact is up for the court to decide what defines undue hardship. The more evidence and documentation a borrower can provide to prove their claims the better chance they’ll have.
 
For those looking to remove their debt through this processes (called adversarial) will have to meet certain standards. Most courts use the Brunner test, which looks at a borrower’s current and future situation. While bleak sounding, continuing to pay off the loan must leave the individual in a “hopeless” state of affairs. Courts also look at how much was paid, and must determine if honest efforts were made to repay the loan.
 
Ultimately, it’s very difficult, but not impossible. Take the example of this article. It was extremely hard for Murphy to get the loan discharged, and he took out federal loans. A private loan from a bank is even harder to get discharged, making the overall prospect of loan forgiveness pretty dismal. Successful discharges mainly result from permanent disabilities, experts say. They also add it’s for those facing true hardship, and shouldn’t be considered by those who have a few struggles repaying loans.
 
It’s a small shred of hope for the financially defunct, but in these cases, there at least can be found some relief.