How To File Bankruptcy With Student Loans?

Start with a good lawyer

I know people who have been able to file bankruptcy at various times during their life without having a lawyer. If you want to do this correctly, though, you need to get legal advice.

Find out if you qualify

You may have to prove that you cannot afford to pay for college anymore. You should consult with a loan counselor to determine if you qualify. Don’t try to go by yourself.

Get prepared

Before you apply for bankruptcy, make sure you’ve got everything ready. Keep copies of your bank statements in case the court asks for them; they’ll also give you any extra information you need about payments and what you owe each person.

Do your homework

Make sure you understand the procedure involved before filing for bankruptcy, including what happens after you’re done.

Keep records

Get organized. Make sure you keep track of all your expenses and credit card usage (you’ll need those later). Use an Excel spreadsheet to keep things organized.

Make a plan

Do some research about how bankruptcy works and how it affects your education. Be realistic about what you think you might be able to pay back and figure out what kind of payment schedule would work best for you.

Pay attention to dates

It’s important to have the paperwork filed no later than April 14th. But even if you miss that deadline, just getting it filed won’t necessarily mean you don’t have to deal with student loans in the future. It’s possible to have an automatic repayment provision added to your federal loans, which means that your monthly payments will start on July 1 of the year following the date of your petition. If you have private loans, however, these debts aren’t dischargeable and they’ll continue to accrue interest throughout the term of your Chapter 13 plan.

How To File Bankruptcy With Student Loans?

Select the correct chapter

Chapter 10 explains how to file bankruptcy under Chapter 13. If you cannot pay back these loans, then you should file Chapte…

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How To File Bankruptcy With Student Loans?

Bankruptcy filings for student loans rose nearly 50% last year as borrowers sought relief from crippling debt loads.

Student loan debt now totals $1.3 trillion, surpassing car loans as the second biggest consumer debt category behind credit cards according to the Federal Reserve’s latest survey.

More than half of college students have some type of student loan debt, and millions struggle to pay their bills. A record number filed for bankruptcy last year, and experts say the trend shows no sign of slowing down.

It can take years for a person to build up a significant amount of debt, especially if they work full-time while attending school. And once someone does start building up debt, it becomes increasingly hard to get out.

In 2017, 1 million people filed for Chapter 13 bankruptcy to wipe away at least $100,000 worth of student debt. That was nearly double the number who did so in 2016.

Chapter 13 lets people repay a portion of their debt over three to five years. But many borrowers don’t know about this option until it’s too late.

Here’s how that happens.

An estimate says that 40% of Americans have student loan debt, and about 75% of those owe money to federal loan programs like the Department of Education and the government-backed Sallie Mae. In addition, private lenders like Navient Corp. (NVCI) and Great Lakes Educational Loan Services Inc. (GLELS) hold billions of dollars worth of loans for borrowers.

Once these companies receive payments from the borrower, they deduct fees before sending any money back to the lender.

The borrower often doesn’t receive enough money to cover their monthly payment, which results in the company charging interest. Many borrowers don’t even realize their loans are accumulating interest.

And that interest comes off top rather than bottom. Companies generally charge higher rates on loans that carry high balances, such as those held by parents or friends who co-signed. Once people find themselves deep in debt, it can be difficult to get them to make payments. Because of this, companies tend to focus on collecting the highest amounts first.

“If you’re in default, they’ll do everything they can to collect,” said Mark Kantrowitz, publisher of Edvisors Network, a site that tracks trends in education.

Companies are legally allowed to contact borrowers’ employers, tax collectors and public utilities to try to collect outstanding debts. Borrowers can ignore these demands, but doing so could lead to garnishment of wages or other penalties.

Borrowers can also ask for an automatic repayment plan. But many people don’t know about this feature, which gives them the flexibility to pay less each month.

How To File Bankruptcy With Student Loans?

What Are Your Options?

You have two basic options regarding student loan debt (or any type of consumer debt) if you want to file bankruptcy. You may be able to declare them exempt from being discharged or you may not. If they are exempt, then you cannot get rid of them at all. However, even if they are not exempt, you may still be able to discharge them after filing bankruptcy. 2. Should You Even Consider Filing Bankruptcy?

If you do decide to go bankrupt, then here are some things you should consider. First, bankruptcy can take about three years to complete (depending upon how long it takes for your case to be settled). Therefore, you will need to think ahead and plan accordingly. Second, once you file bankruptcy, you will be unable to use credit cards or make purchases for approximately six months. Third, you will lose your home immediately, if the mortgage company does not agree to give back the equity in your house. Fourth, if you own a car, you might end up losing it. Fifth, if you owe money on any kind of insurance policy, you might find yourself uninsured if you file bankruptcy. Sixth, you need to remember that paying off student loans is considered a priority under the bankruptcy code. Seventh, your credit score will likely take a huge hit if you file bankruptcy. Eighth, if you have children, then they will probably lose their education until they are no longer minors (about age 18). Ninth, you will pay 10% or 15% of what you actually earn for your attorney fees and filing fees. Tenth, you could face tens of thousands of dollars in fines if you fail to disclose assets or income while going through the bankruptcy process. Finally, and perhaps the biggest downside to filing bankruptcy, you will probably never be able to refinance your student loans again. So, do you really want to go through this?

How To File Bankruptcy With Student Loans?

If you are having trouble paying off student loans, you may be wondering how to file bankruptcy with student loans. While filing for bankruptcy may not eliminate all of your debts, it does help to consolidate them and make repayment easier. You should consider whether bankruptcy would benefit you before deciding if it’s right for you. Here are some things to keep in mind:

*Bankruptcy affects your credit rating. If you have bad credit, you’ll need to prove to lenders that you’re financially stable enough to repay your debt. Having access to good credit helps you get approved for better interest rates.

*You may lose your home. If you live in your house, you might want to look at Chapter 13 bankruptcy and be able to keep your home while repaying your debt. However, if you don’t own your house, it won’t help you.

*Your income could change. Filing for Chapter 13 bankruptcy means your monthly payments go down and your total amount due goes down as well. Your creditors will likely lower your payment amounts based on what they think you can afford now. However, you may end up making less money than you were before, depending on the type of job you had.

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