It is important to know, however, that student loans are not discharged in bankruptcy as rapidly as other types of debt, such as credit card debt or medical bills. In order to discharge a student loan in bankruptcy, you must show that repaying the loan will cause you "undue hardship." This is a high standard to meet, and it is not always met.
There are two types of bankruptcy for student loan debt: Chapter 7 and Chapter 13. Chapter 7 bankruptcy is a liquidation bankruptcy, which means that your assets will be liquidated to satisfy your creditors. Student debts, however, will not be discharged because they are not considered assets in Chapter 7.
Chapter 13 bankruptcy is a type of reorganisation bankruptcy in which you create a repayment plan to repay your debts over time. Your school debts may be eligible for inclusion in your Chapter 13 repayment plan. The amount you must pay, however, is governed on your income and expenses.
If you are considering filing for bankruptcy, you should consult with an attorney to discuss your options. An attorney can advise you on whether filing for bankruptcy is the right option for you and help you complete the appropriate paperwork.
You have additional options if you are unable to discharge your student loans through bankruptcy. You may be able to accomplish the following:
Alternatives to Student Loan Debt
Repay your student loans. Refinancing your student loans might help you save money by lowering your interest rate and monthly payments.
Repayment arrangements based on income.
Income-driven repayment options might lower your monthly payments based on your income.
Loan forgiveness is available to government employees
Loan forgiveness is available to government employees
. The government may eliminate your education loans after ten years of qualifying payments while working in a qualifying job.
There are resources available to help you if you are experiencing problems repaying your student loans. Your loan servicer may be able to assist you through deferred, forbearance, or income-driven repayment schemes. The United States Department of Education can also assist you with public service loan cancellation.
There are resources available to help you if you are experiencing problems repaying your student loans. Your loan servicer may be able to assist you through deferred, forbearance, or income-driven repayment schemes. The United States Department of Education can also assist you with public service loan cancellation.
Conclusion
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