Student Loan Bankruptcy

Visitor (not verified)
anonymous user
Registered: 12-31-1969
Student Loan Bankruptcy
6
Mon, 08-13-2012 - 10:14pm

Has anyone ever filed bankruptcy on their student loans? I am currently about $18,000 in debt and still a full time student, i need to get rid of this debt.

Community Leader
Registered: 07-26-1999
Tue, 08-14-2012 - 10:10am
Student loans are non-dischargable in bankruptcy, so even if you file for bankrutpcy the student loans will not go away. The only exception is if they were personal loans that you used to pay for school, but not directly student loans. If you are a full time student aren't the student loans currently in deferment?
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Community Leader
Registered: 07-26-1999
Wed, 08-15-2012 - 9:16am
You "can't" defer it at all? If not, it may not be a true student loan. All student loans are set up to be able to be deferred as long as you are in school full time as far as I am aware. However depending on the amount, filing bankruptcy may not be the best long term option. Have you talked to the company about a graduated scale based on income? How much is the "non-deferable" compared to the other loan, what are your monthly expenses and income? The Debt Support board may also be an option to post and see what the ladies over there would suggest about stretching money to get through while in school.
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iVillage Member
Registered: 03-17-2003
Tue, 08-21-2012 - 12:03pm

Hi cettlin1279. Tracy's reply is 100% correct.  There is a very narrow exception and it is reserved for those filing bankruptcy who have little likelihood (due to dire circumstances) of ever repaying their student loans. In such cases the court applies a test for the filer to prove there is an undue hardship. This also requires another step in the bankruptcy process that necessitates filing a petition within the bankruptcy court. 

Each judicial jurisdiction is different in the process, but the filer must prove the following: (1) you cannot maintain, based on current income and expenses, a “minimal” standard of living for yourself and your dependents if forced to repay the student loans; (2) additional circumstances exist indicating that this is likely to persist for a much of the repayment period of the student loans (disability is one such circumstance); and (3) you made good faith efforts to repay the loans.  See what I mean?  It is a narrow exception. I wanted to post this information so you and readers are aware there is a possibility to address student loans in bankruptcy albeit a narrow opportunity.

Currently there are efforts to make changes in the bankruptcy code for student loans but changes to the federal bankruptcy code are not speedy and it is not anticipated that there will be change in the near future.

Fortunately it doesn't sound like you have suffered such a change in your circumstance to qualify for discharging your student loan debt in bankruptcy, nevertheless it doesn't change the fact the student loans are sitting out there and causing you concern.  Let's hope there is some relief in the future.

Carolyn

iVillage Member
Registered: 10-31-2002
Wed, 12-26-2012 - 9:17am

You cannot bankruptcy on student loans. Here are some recommendations: track your spending, create a spending plan, pay even 10.00 on the existing loans. Important look at work study, grants, scholarships, etc. The Peterson Guide to Scholarship is great. 18,000 is not alot. Get a full time job and begin to pay down the loan and NO CREDIT CARDS...You can graduate with no debt, I have worked with clients who have accomplished this!