How To File For Bankruptcy For Student Loans?

How To File For Bankruptcay For Student Loans?

Student loan debt continues to rise at a staggering rate, increasing by $1 billion per day. Unfortunately, many people have no choice but to file bankruptcy if they want to pay off their student loans. However, before you decide to file bankruptcy for student loans, take a look at these tips first!

What Is A Chapter 13 Bankruptcy?

A chapter 13 bankruptcy is a special type of personal bankruptcy that is designed to help individuals repay their debts over three years. If you cannot afford to make monthly payments on your loans, then filing for a chapter 13 bankruptcy could be the best solution. There are some requirements that must be met for any person who wishes to file for chapter 13 bankruptcy.

Why Would Someone Owe So Much Money On Their Loan?

The government offers several types of financial aid to students. Students who qualify may receive grants and bursaries from the federal government, state governments, universities, colleges, and even private companies. These loans are given out to students with exceptional grades, gifted students, those with disabilities, and veterans. Once granted, however, these funds become federal income tax deductions for the individual. As long as you continue to work towards repaying your loan, the interest stops accruing. When you graduate, your remaining balance becomes forgiven. This means that the total amount you owe after graduation is wiped clean. While this sounds great in theory, the problem arises when people do not meet their repayment obligations. In addition to paying back the principal, borrowers must also pay back accumulated interest.

Is Chapter 13 Better Than Filing For Bankruptcy?

Chapter 13 bankruptcies often involve less paperwork than traditional bankruptcy filings. This is because the court handles the entire case on behalf of the borrower, while a trustee oversees the distribution of assets to creditors. Most importantly though, chapter 13 allows for extended payment plans. Instead of having only two options – either complete repayment or discharge your debt – you may choose from various repayment plans depending on how much money you earn and how much money you spend. If you’re able to make payments on time, you’ll have the opportunity to pay back your student loans over a five-year period instead of a three-year period.

How Does Chapter 13 Work?

If you wish to file for a chapter 13 bankruptcy, you will need to go to court. Here, you will present evidence that proves you have filed all the necessary documents. You will also need to show proof that you have tried to settle your debt outside of bankruptcy. Then, the judge will review the situation and determine whether or not you should be allowed to file for bankruptcy. If he or she says “yes,” then you will be given permission to proceed. After that, the court will assign a trustee to oversee the bankruptcy. Your trustee will review your finances and try to find ways to lower your monthly payments. He or she may offer different payment plans based on your salary and expenses.

Is Chapter 7 Better Than Filing For A Chapter 13 Bankruptcay?

While both chapters allow for student loan forgiveness, chapter 7 bankruptcy is better suited for people without dependents. In order to qualify to file for chapter 7 bankruptcy, you must prove that you do not have any unsecured debt. If you have secured debt, including mortgages and car loans, then you will not be eligible. If you have no debt, then you will not have to worry about repaying your student loans. Your remaining balance would be discharged immediately.

Will I Be Able To Get My Student Loans Discharged Under Chapter 7?

No. Chapter 7 will always disallow all forms of debt unless there is enough money left over for unsecured creditors. Any unsecured debt will not get paid back. Even if you are unable to pay off your student loans under chapter 7, you might still be able to file for a fresh start later on. Just remember to keep track of all your bills. Once you graduate and obtain employment, you will need to repay your loan. Otherwise, you may end up owing more than what you started with.

How To File For Bankruptcy For Student Loans?

Disclaimer: This video is for educational purposes only and should not be considered legal advice. Seek out professional help if you think you’re unable to pay off your student loans. I am not a lawyer nor do I give any guarantees about how bankruptcy would affect you. If you have questions about whether or not filing for bankruptcy might qualify you, please visit www.USBankruptcyLawInfo.com for answers to some basic questions. After completing my first loan payment after filing for bankruptcy, I decided to take advantage of their services at www.StudentLoansSettlement.com and was able to get a good deal without having to go through court.

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How To File For Bankruptcy For Student Loans?

A student loan is a loan given to students who wish to pursue higher education. Under the federal bankruptcy law student loans are considered unsecured debts meaning they have no priority over other creditors. If a debtor files for bankruptcy, student loan obligations are often discharged. However, in many cases debtors may need to file under Chapter 13 bankruptcy instead of Chapter 7. In order to successfully discharge student loans through Chapter 13 bankruptcy, a debtor must meet several qualifications including having enough disposable income to fund repayment.

Disposable Income

Disposable income is defined as monthly income remaining after paying for necessities and putting aside money for emergencies. Monthly expenses include housing, utilities, food, clothing, transportation, medical care, insurance, entertainment, recreation, school supplies, childcare, cable/Internet service, cellphone, credit card payments, auto maintenance costs, and any other recurring expenses.

Income Tax Refund

A good way to  extra funds is to receive a tax refund. A tax refund is basically money a taxpayer gets back from the IRS in excess of what was originally paid in taxes. Most taxpayers get a check from the Internal Revenue Service (IRS) around April 15th that lists all their outstanding tax liability. While most people use these refunds to pay off debts, some individuals do use them to cover living expenses. As long as these amounts don’t exceed the amount necessary for basic living expenses, then using a tax refund to pay student loan bills is acceptable.

Loan Modification

If a borrower’s income drops below a certain threshold or if the interest rate on their student loans rises above a specified level, they may qualify for a loan modification. These modifications are offered at various levels of flexibility depending on how much your income drops or how high your interest rates rise. Typically, borrowers can achieve the best results if they’re willing to make larger than average monthly payments and commit to a fixed payment plan.

finance

Another option for paying student loans is to refinance your current student loans. Many banks offer low interest rates on federally guaranteed private student loans. Borrowers should consider refinancing when both their original federal student loans and private student loans are serviced by the same lender. When comparing student loan companies, borrowers should compare the terms of each company’s loan products and determine which fits their individual circumstances best.

Consolidation

If a borrower owes a lot of student loans, he or she could consolidate those loans into a single loan. By doing so, the borrower saves on interest charges and pays only one monthly installment. Before consolidating, borrowers should evaluate whether the cost savings outweigh the added administrative burden.

Debt Snowballing

The last option for repaying student loans is called debt snowballing. This strategy involves making larger and larger monthly payments until all of one’s balances are completely repaid. It requires patience and discipline, but it can dramatically increase the likelihood of success.

How To File For Bankruptcy For Student Loans?

If you’re drowning in student loan debt, chances are you’ve tried pretty much everything under the sun to pay off your loans, only to find out that the debt just keeps piling higher and higher. If you’ve exhausted all other options to bring down your student loan payments, then filing for bankruptcy may be your last resort. But before we get into how to file for bankruptcy, let’s first take a look at what bankruptcy actually means.

Bankruptcy Is Not A Bad Thing

The truth is, bankruptcy laws were created for good reasons — namely, they protect people who have fallen on hard times after making bad financial decisions. When someone files for bankruptcy, he or she is legally prohibited from repaying his or her creditors anything until those debts have been completely paid off. In short, bankruptcy isn’t a sign of failure; rather, it’s a necessary measure to help families that need it.

You Can Still Try Out Other Solutions First

While filing for bankruptcy may seem like your final option, there are still plenty of ways you can try to reduce your student loan payments without having to declare bankruptcy. You could start cutting back on unnecessary expenses (you don’t really need to splurge on expensive dinners if you’re struggling to make ends meet), and consider lowering your monthly payment plan by applying for a lower interest rate. You could also talk to your lender about consolidating your loans and taking advantage of government-backed loan forgiveness programs.

How To File For Chapter 13 Bankruptcy

So, now that we know what bankruptcy is and isn’t, we can move on to the how-to portion of our guide. While you can apply for bankruptcy yourself, it’s often easier to hire an attorney to handle the paperwork. Many law firms offer free consultations to give prospective clients a chance to figure out whether bankruptcy would be right for them. Afterward, you’ll be given a list of requirements you’d have to fulfill in order to qualify for bankruptcy. Once you’ve met these qualifications, your attorney will draft the documents and submit them to the court for approval.

Once the bankruptcy petition has been approved by the judge, the rest is pretty simple. Typically, once your case gets filed, any remaining debt will be discharged, meaning you won’t have to worry about paying back any outstanding loans. However, even though you won’t owe any money anymore, you still won’t be able to collect on any unpaid wages you’ve accrued while you were laid off due to your job loss. And since you’re no longer allowed to work, you won’t receive unemployment insurance either.

It’s important to note that not everyone qualifies for bankruptcy, so it’s best to speak to a lawyer before submitting any paperwork. After all, you don’t want to turn your dream of becoming debt-free over something that doesn’t suit your personal situation. So, if you’re struggling with student loan debt, remember that bankruptcy isn’t the end of the world. There are other solutions available to you, and seeking legal counsel is always a smart idea.

How To File For Bankruptcy For Student Loans?

This video is designed as educational information only and does not constitute legal advice. We do NOT provide legal advise or representation. Do NOT send us any confidential information. We recommend that you consult with a licensed attorney if you need assistance with your student loans.

Any references to specific trademarks, services, products or programs contained herein do not constitute or imply endorsement, sponsorship or recommendation thereof by the United States Department of Education.

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