Possibilities Of Declaring Bankruptcy With Student Loans
If you are carrying a large student loan and are finding it hard to keep up with your payments, you may be wondering what options you have. You might even be considering filing for bankruptcy as a way to get a fresh start.
When it comes to bankruptcy and student loans, is this a viable option?
In the case of bankruptcy and student loans, the situation is a bit more complicated than with other types of debt. If you have a government-sponsored student loan or one issued by a non-profit agency, then filing for bankruptcy is not the answer. These types of loans are not discharged by declaring bankruptcy. You would still be responsible for paying back the entire amount, even if other debts were discharged.
While it is possible to have student loans discharged through bankruptcy, it’s quite difficult to satisfy the requirements for having your debt discharged in this manner.
The borrower has to prove that he or she has made an effort to pay, is unable to keep up with the agreed-upon payment schedule, and that his or her financial situation is permanent. If there is absolutely no hope that payments can resume or that the borrower’s financial situation will improve, the bankruptcy court may consider discharging student loans. However, the court will not consider relief until after this undue hardship has be established. It is a pretty difficult hurdle to overcome.
Alternatives to Bankruptcy
If you are having trouble keeping up with your loan payments, the best approach is to tell your lender. A lot of people are hesitant about discussing their financial situation with their lender. This is the best approach if you feel that you can’t make your loan payments as arranged.
You will be much better off making some sort of alternate arrangement before you are in default on your loan. Once you are in default, you will have fewer options to rectify the situation.
Keep in mind that your lender has dealt with people in your situation before and that in the vast majority of cases, an alternate payment arrangement can be worked out.
Just because bankruptcy and student loans generally don’t go together, it certainly doesn’t mean that you are lacking in options if you are having difficulty in keeping up with your payments.
Call today and speak directly with an attorney for a free, no obligation, consultation to see if you qualify for bankruptcy and if it is the right decision for you and your family.
Wessler Law Firm is a small family owned law firm specializing in bankruptcy law since 1982.
Disclaimer: This article is meant for reference only, and is not intended to be legal advice.
For legal counsel regarding your situation, please consult an attorney licensed in your state.