Bankruptcy And student Loans

Student Loans And Bankruptcy - Bankruptcy And student Loans

Whenever a man considers filing for personal bankruptcy and student loans make up a good part of their debt, there is a good opening the loans will not be discharged. In 1998, when the government's rules about bankruptcy were changed, student loans were ruled to be non-dischargeable as many financial institutions were losing million of dollars. Additionally, the government was losing millions of dollars on loans that were guaranteed by the federal government when the loans were discharged through bankruptcy.

Student Loans And Bankruptcy

Today, the man claiming part 7 bankruptcy has to show that an undue financial hardship will succeed if the loans are not discharged. As in many cases with bankruptcy and student loans make up a large portion of the individual's debt, a portion of the loan may be discharged by the judge, but most of the loan will remain a legal debt. In other cases in bankruptcy and student loans are reviewed, if the loans are found to have been sold repeatedly to other lenders and with changing interest rates it is difficult to rule an exact balance, some or all of the loan may be discharged.

Under the provisions of part 13 bankruptcy, a debtor can arrange to have all of their unsecured and secured debt become part of a reimbursement plan through a court trustee. In these cases of bankruptcy and student loans are included, the man must meet specific criteria, for example showing they have sufficient earnings to make the monthly payments determined by the court to pay off the total debt within five years.

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