Any number of personal setbacks could cause student loan borrowers in Oregon to fall behind on their payments. Although people largely believe that student loans cannot be discharged by a bankruptcy action, cases of undue hardship might convince a judge to provide a debtor with relief from student loans.

Courts possess a fair amount of latitude about whether to accept a claim of undue hardship. Generally, a student loan debtor might seek the discharge of his or her loans if his or her income does not support a basic standard of living. A debtor also must show that the financial hardship will persist for the foreseeable future. He or she must also present the court with evidence that a good faith effort has been made to repay the loan.

Due to the impact that a bankruptcy filing will have on a person’s credit report, a debtor might consider alternatives. People responsible for federal student loans could apply for a recalculation of the payment based on their current income. Individuals also might pursue deferment or forbearance. These routes temporarily suspend payments or reduce their amounts.

Legal advice might improve someone’s ability to navigate important financial decisions. An attorney might provide insights about consumer rights and the pros and cons of various debt management approaches, including bankruptcy. A legal consultation might help someone determine what form of bankruptcy he or she might qualify for depending on his or her available financial resources. A Chapter 13 reorganization would require payment of some or all debts, and a Chapter 7 liquidation might force the sale of a person’s nonexempt assets. If an individual decides to file, then an attorney might prepare financial disclosures for the court and manage communications with creditors. Services like these might protect a person’s rights and resolve burdensome debts.