New Jersey Student Loan Attorney

Loan forgiveness and discharge programs provide significant relief for borrowers struggling with student debt. In New Jersey, residents have access to several federal and state-sponsored opportunities designed to alleviate or eliminate their student loan obligations under specific circumstances.

Federal Loan Forgiveness Programs (e.g., Public Service Loan Forgiveness)

The Public Service Loan Forgiveness (PSLF) program is one of the most well-known federal initiatives, designed to forgive the remaining student loan balance of eligible public service workers after they have made 120 qualifying monthly payments. This program encourages individuals to enter and continue in public service careers by offering substantial financial benefits. Other federal programs also exist, targeting teachers, healthcare workers, and those in various public sector roles, each with specific eligibility requirements.

Discharge Due to Disability or Bankruptcy

Discharge of student loans due to disability is available through the Total and Permanent Disability (TPD) discharge program, which releases borrowers from the obligation to repay their federal student loans if they can prove they are permanently disabled. In cases of bankruptcy, while typically challenging, it is possible to discharge student loans if the borrower can demonstrate that repayment would impose undue hardship on their life. This requires a separate proceeding during the bankruptcy case known as an “adversary proceeding.”

New Jersey State-Sponsored Loan Forgiveness Opportunities

New Jersey offers specific loan forgiveness programs aimed at residents who fulfill certain roles or conditions. For example, programs may target those in high-need fields or underserved areas, offering to forgive a portion of their loans in exchange for service commitments within the state. These programs are designed to attract and retain talent in critical sectors and to support the financial health of those who serve the community.

At Straffi & Straffi Attorneys at Law, our attorneys are well-versed in the various loan forgiveness and discharge opportunities available to New Jersey residents. We can provide detailed advice on eligibility criteria, assist with the application processes, and help resolve any legal issues that may arise during these processes. For borrowers exploring their options for reducing or eliminating student loan debt, our firm offers knowledgeable legal support to explore these beneficial programs effectively, aiming to secure the best possible outcome for each client’s financial and personal situation.

In New Jersey, addressing student loans through bankruptcy is a legally intricate process that demands a clear understanding of federal guidelines and state-specific regulations. 

Feasibility of Discharging Student Loans in Bankruptcy

Discharging student loans in bankruptcy is notoriously challenging but not impossible. Under current laws, borrowers must demonstrate that continuing to repay the loan would result in “undue hardship,” a condition that is rigorously tested through specific criteria. In New Jersey, courts typically use the Brunner test, which requires proving that one cannot maintain a minimal standard of living if forced to repay the loans, that this hardship is likely to persist for a significant portion of the repayment period, and that the borrower has made good faith efforts to repay the loans.

Chapter 7 vs. Chapter 13 Bankruptcy Options

The type of bankruptcy filed influences the treatment of student loans:

• Chapter 7 Bankruptcy: Known as liquidation bankruptcy, it involves the sale of non-exempt assets to pay creditors. While it can discharge many debts, student loans are generally not discharged unless undue hardship is proven.
• Chapter 13 Bankruptcy: This reorganization bankruptcy allows for a repayment plan over three to five years. Student loans are treated as non-priority unsecured debts, meaning they may not be fully paid off during the plan. However, any remaining student loan debt after the repayment period typically remains unless undue hardship is established.

Choosing between Chapter 7 and Chapter 13 depends on individual circumstances, including income, assets, and specific financial goals.

At Straffi & Straffi Attorneys at Law, our knowledgeable attorneys are equipped to assess the potential for loan discharge via bankruptcy and can guide clients through both Chapter 7 and Chapter 13 filings, including the critical adversary proceedings. For those feeling overwhelmed by student debt and considering bankruptcy as a solution, our firm provides comprehensive legal support to explore all available options and pursue the best course of action tailored to each client’s unique financial circumstances.