Student Loan Bankruptcy Is Not Really An Option

Several surveys that have been conducted across the nation show that student loan debt stands really high

. There are several reasons for this and therefore there seems to be an increased tendency by students to look into student loan bankruptcy as a solution. Other options also include debt forgiveness programs and a vast range of ways of that will help bring down the financial burden of student loans.

The problem with student loan debts is that the bankruptcy law began to get misused. To prevent this from happening, the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 was put into place. What this means is that you are no longer able to legally write-off private or federal college based student debt. but you can approach the court in extreme cases to reduce the amount that you owe. In most cases, what the court will do is create repayment schedule for you, much like how its done in Chapter 13 bankruptcy filings.

The singular in which to overcome this rule is when the debtor or student is able to prove that they are no longer capable of working and earning the amount needed. This may be to due to a physical ailment or disability. You will need to prove that your earning potential has been significantly decreased and that there is nothing you can do about it. The assessment for this however is extremely stringent and applies to very few students.

If you manage to get a public sector job such as being a teacher or a nurse or a member of the armed forces, it is possible that you may be eligible for the debt forgiveness program. If you have a federal student loan, a fixed percentage of it will be eliminated. However, the figure forgiven depends on the current economic scenario and is subject to change. This is also not applicable to private bank loans.

Another means of repaying a student loan is if you have not been a defaulter till now, you could apply for a deferment of payment. This is capped off at a period of three years. The good thing about this is that there is no interest that will accumulate on the figure outstanding with the exception being Perkins loans as well the means tested Stafford loan.

Being actually able to write off college loan debt through student loan bankruptcy is possible only for very few. Being able to prove disability is quite an uphill task.

by: Enrique Castillano

POST COMMENT

Is It Hard to File Bankruptcy Again? Debt Settlement Vs Filing Bankruptcy - What Debt Relief Tactic Makes the Most Financial Sense How To Stop Foreclosure Without Filing For Bankruptcy Bankruptcy Assets – Which Assets Are Divisible Assets? Cleaning Up Your Credit Report After Bankruptcy How To Improve Your Credit Report Post Bankruptcy Finding Reliable Bankruptcy Attorney, Hamilton (nj) Experienced Bankruptcy Lawyer Hamilton Nj Importance Of Bankruptcy Lawyer, Trenton (nj) Bankruptcy Or Debt Relief, Hamilton (nj): Which Should You Choose? Bankruptcy Advice: Get The Help You Need Credit Card Bankruptcy - Why Debt Settlement Is Better For Credit Card Relief Getting Back at Your Feet Despite Bankruptcy in California