Student Loan Debt Difficult To Discharge But Bankruptcy Still Helps

More than 14 percent of youth are unemployed, with 500,000 college graduates defaulting on their student loans since 2008. This number is set to increase as our problem of unemployment does not seem to have a quick fix on the horizon and current graduates leave school with as many private loans as federal loans. Some analysts have said that these debtors filing bankruptcy is not a smart move, because it can be difficult if not impossible to discharge student loan debt. However, it is not black and white areas. Many students not only graduate with student loans, they graduate with credit card debt and other types of records that can be discharged in bankruptcy. So let's look at how the bankruptcy might be able to help student borrowers.

perpetrators of credit card debt in bankruptcy

Students for filing bankruptcy with student loan debt May be able to carry their credit card debt in bankruptcy. Many students are graduating with just as much credit card debt. Using bankruptcy to discharge these debts credit cards can be useful in the release of income that can be devoted to paying down school loans.

perpetrators remain unsecured debt

credit cards and student loans are not the only types of debt tapping students. Many find themselves saddled with medical debt, personal loans, auto loans and other types of debt not backed by the federal government. And other debts can be discharged in bankruptcy and take off a lot of financial pressure. That is why it is wise for students to not use their school loans for vehicle purchase, credit card or loan payments to pay down medical debt, because those loans will not be dischargeable in bankruptcy, even if used to pay debts dischargeable.

Bankruptcy lifesaver during unemployment

Even if a borrower is unemployed, they can use Chapter 7 bankruptcy in order to get a break from private loans and May will be able to force a private student loan lenders to the negotiating table. In Chapter 7 bankruptcy, the debtor can protect certain assets from creditors, while in front of the property, such as houses or cars so they can get relief from the debt secured. During the automatic stay, even student loan creditors can not seize property without requesting the bankruptcy court to grant them relief from the automatic stay. And even debtors with large amounts of student loan debt may find some relief in bankruptcy.

Once the borrower gets a bankruptcy discharge, they will have more money to devote to repaying their student loans, and they will have the flexibility they need to start rebuilding their credit history. It is important that debtors use bankruptcy as a possibility to be on a repayment plan with lenders or if you are unemployed or patience to seek hardship deferment.