In 2014, about 40,000 Americans had student loan debts. Combined, these debts exceed $1 trillion! If you are facing hard financial times and hope that filing for bankruptcy will make your student loans magically disappear, think again. Here is what you need to know about bankruptcy options and how filing affects your student loans.
Understanding the Types of Bankruptcies
If you choose to file for bankruptcy, you have four options.
How Do Student Loans Fit In Bankruptcy?
Student loans are seldom discharged in a bankruptcy proceeding. Today, it is not uncommon for student loan debt to amount in the six-figure range, and monthly payments are frequently as much, if not more, than a mortgage payment. Thus, even after the dust settles on your bankruptcy proceeding, you might still find yourself in a financial hardship.
In very few limited cases, student loan debt can be discharged in a bankruptcy proceeding. To qualify for student loan discharge in a bankruptcy proceeding, you have to show that if you pay your debt, you will be unable to maintain a minimal standard of living, your financial situation is unlikely to change in the long run, and you actually made a solid effort to pay these loans in the past, but failed. It is very difficult to qualify for student loan discharge.
What Can You Do?
If your attorney like Arthur M Richard reviews your situation and does not believe that you will qualify for student loan debt discharge, do not despair. There are still options available for you.
First, even though Chapter 7 is the most common bankruptcy filing, you can choose another method. Chapter 13 is a great option if you do not qualify for student loan debt discharge but cannot make your monthly student loan debt payments. As an added bonus, you do not need to part with your property.
Second, there are numerous student loan repayment options that make repayment more manageable. Income-based repayment plans are particularly useful options that let you make more affordable monthly payments. Temporary forbearance and deferment periods can also relieve you of monthly payments while you sort out your financial situation. You can use these options regardless of the type of bankruptcy that you file.Share
22 February 2015
When I was a child, I regularly visited a local department store. At this lovely business establishment, one could purchase many items including clothing, shoes, and even hotdogs. Sadly, due to competition and other factors, the store closed its doors for the last time several years ago. If the owners of the store had considered bankruptcy options, they might still be meeting customers’ needs today. On this blog, you will learn how to resurrect your business with available bankruptcy alternatives. Regardless of whether you choose to liquidate your assets or reorganize your entity, the opportunity to remain in operation might be an option for you.