Private Student Loans Discharged In Bankruptcy

6 min read

A private student loan discharged in bankruptcy may seem like a dream, but it’s not. Private student loans can sometimes help students graduate school and start their career. But if a borrower gets behind on payments, the lender may begin to garnish wages, take out liens against real estate, and even sue borrowers in collections court. If you’re thinking about filing bankruptcy, consider talking to your attorney first to see what options might be available to you. Here’s how a private student loan discharged in a bankruptcy could work.

Private Student Loan Discharge In Bankruptcy Is Possible

When you file for Chapter 13 bankruptcy, your debtors’ statements indicate whether or not your debts have been paid off. While discharge does not affect your credit score, it does mean any outstanding balance owed to the original creditor is now considered discharged. That means that the entire amount is no longer legally due and owing. However, because certain types of debt are not eligible for discharge, including private student loans, it might still be possible to get a private student loan discharged. To do so, you’ll need to go to a lawyer who specializes in bankruptcy law.

How Can I Get My Private Student Loan Discharged?

The best way to accomplish this is to file for a full-discharge under Chapter 7 bankruptcy. You should know that only three types of debt are discharged under Chapter 7 bankruptcy – unpaid taxes, child support, and alimony. These debts are not dischargeable unless they’ve been listed on your personal schedule of liabilities. Private student loans, however, are not included in this list.

Why Would Anyone Want Their Private Student Loan Discharged In Bankrupty?

There are several reasons someone would want their private student loan discharged in Chapter 7 bankruptcy. One reason is if you’re currently having trouble making payments and going back to college wouldn’t solve the problem. Another reason is if you are not going to college anymore and you don’t need the money to pay for college. And finally, if you are current on your payments but your interest rate is very high, then discharging your private student loan could save you thousands. Your private student loan discharged in chapter 7 bankruptcy would become the responsibility of the trustee of your case, meaning you would no longer owe anything to the creditor.

What Are The Creditor Rights When A Private Student Loan Is Discharged In Bankruptry?

If you default on a private student loan, you are liable for the payment, plus interest, fees, and collection costs. If you fail to make payments and stop communicating with the lender, the creditor can pursue legal action like wage garnishment, foreclosure proceedings, or even lawsuit. In addition, the creditor can charge you late fees, send letters threatening bad credit ratings, lower your credit score, and report negative information on a credit history report. All of these things can damage your credit rating and make it difficult to borrow money in the future. Once the private student loan is discharged in bankruptcy, the creditor loses all rights over the debt.

How Does A Private Student Loan Discharged Under Chapter 7 Work?

A private student loan discharged in bankrupty works similar to other forms of non-dischargeable debt. For example, if you default on a car note, you are responsible for the full amount of the note, plus interest, fees and penalties. After you file for Chapter 7 bankruptcy, the creditor cannot collect additional amounts. If you default on a mortgage, your home goes into foreclosure. In both cases, after the creditor takes possession of the property, you lose any further claim to the collateral. The same holds true for a private student loan. As soon as you file for Chapter 7, your creditors lose their right over the debt. Any remaining balance becomes the debtor’s responsibility.

What Happens If A Debtor Has Too Much Debt?

You probably already know that if you owe too much debt, you won’t qualify for a low-interest rate loan. If you own too many cars and have too many bills, you are likely to find yourself unable to keep up with your payments. That’s especially true if you have private student loans. And if you do end up getting behind on paying your private student loan, you risk losing all of your rights to repayment.

Do I Need An Attorney To File For My Private Student Loan Discharge?

Private Student Loans Discharged In Bankruptcy

This is a  for a news article about how private student loans were discharged in bankruptcy.

Private Student Loans Discharged In Bankruptcy

How do I discharge my private student loans?

If you have private student loan debt, then filing bankruptcy may help you clear out some of your personal liabilities. You can file for Chapter 7 bankruptcy if you are facing any type of consumer debt. Private student loans are not dischargeable under Chapter 13 bankruptcy. However, they can be discharged in Chapter 7. To learn how to discharge a private student loan, visit our website at www.dischargesuccess.net/private-student-loans.html.

Why should I consider discharge of my private student loans?

Chapter 7 Bankruptcy discharges your private student loans. If you want to get rid of your student loan debts, then Chapter 7 bankruptcy is likely to be the best option for you. At the same time, you can use the funds from these loans to pay off other obligations while you are in bankruptcy. Your private student loans become property of the bankruptcy estate. You cannot get them back once the bankruptcy is over unless you reaffirm the debt.

What happens after I file for bankruptcy?

After filing for Chapter 7 bankruptcy, you need to notify lenders about what happened. Most of them automatically stop processing payments. Since you don’t have to make monthly payments anymore, lenders will start sending letters asking you to repay the money owed. A credit counselor can assist you in negotiating with lenders regarding repayment of your outstanding balance. After all, you still owe them money. But if you successfully negotiate with creditors, you won’t need to worry about paying back your private student loans again.

The information contained on this page is provided for informational purposes only and is not legal advice. Discharging student loans in bankruptcy does not guarantee that you will avoid defaulting on your private student loans. Please consult your attorney before taking action.

Private Student Loans Discharged In Bankruptcy

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Private Student Loans Discharged In Bankruptcy

Private student loans discharged in bankruptcy

Bankruptcy laws allow you to discharge private student loan debt if they were incurred to pay for college expenses. However, you need to meet certain requirements, including having a hardship due to disability, illness, job loss, divorce, death of a spouse, or having a child born with a serious birth defect. Additionally, you may not have enough money leftover after paying reasonable living expenses and medical bills. You may still qualify if the total amount borrowed exceeds $23,550.

What happens if I don’t make my monthly payment?

If you miss a payment, you’ll get an initial notice regarding your late payments. If you continue to fall behind, you’ll receive a second letter, followed by a third letter. Each time you’re late, the bank will add penalty fees (interest) to the balance. Once you’ve missed five months in a row, the lender won’t accept any further payment until you’ve paid off the entire debt. Then, if you haven’t repaid at least 90 percent of what you owe, you’ll lose your right to file for Chapter 13 bankruptcy protection. You could also forfeit your home if you’ve defaulted on your mortgage. And if you’re unable to repay your debt, then you’d face criminal charges.

Can I use a credit card while filing for bankruptcy?

The bankruptcy court doesn’t care whether you use a credit card while trying to reorganize your finances. But using a credit card before you declare bankruptcy could hurt your chances of getting approved for Chapter 13 bankruptcy. That’s because creditors who do business with you after you declare bankruptcy will be able to charge back their original purchases. Also, if you take out additional debt while going through the bankruptcy process, then you wouldn’t be eligible for Chapter 7 bankruptcy. Your debts would have to exceed your income — and possibly your assets — to be considered eligible for either kind of bankruptcy.

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