Can You Declare Bankruptcy On Student Loans? Get The Facts Here

Can You Declare Bankruptcy On Student Loans? Get The Facts Here

For many people who find themselves unable to pay back their debts no matter what they do, resorting to bankruptcy is a viable means of starting over fresh and discharging those debts that have been haunting them. But what if your main problem is that you are seeking to declare bankruptcy on student loans?

Well, student loans, like other things including alimony, child support and outstanding federal taxes, are often exempt from chapter 7 discharge. This means that technically you cannot declare bankruptcy on student loans.

There is actually, believe it or not, good logic behind this. The added security of knowing that people cannot declare bankruptcy on student loans makes lenders more keen to lend to students, thus ensuring that more people can go on to obtain a college degree and earn a higher income in later life thanks to these added qualifications. Reducing the number of lenders prepared to assist students would dramatically reduce the number people who could go to college.

Of course, as with everything, there are exceptions. If you can prove undue hardship and really are in a dire situation where you could not possibly pay back the loan while still maintaining a minimal standard of living and you have a sympathetic judge presiding over your case, then there is a possibility than an exception will be declared and your student debt will be discharged.

Essentially, though, in order to qualify for this, you have to be able to prove that you have tried and failed (and tried very hard) to repay the debts and that you are still unable.

If this does not work, then you could try obtaining an administrative discharge. Yes, ok, the chances of obtaining this are low but you have nothing to lose. Under certain circumstances, such as if you are disabled for life, then you may be granted this. Additionally, joining the Peace Corps or Military can eliminate debts.

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