Nowadays, what most people do is that they try to set out new goals for themselves while going through the bankruptcy process and one way that these people can get to build a better life as well as being financially stable in the nearest future is through obtaining a college degree. If you are stuck on a bankruptcy repayment plan, then how can you afford your college tuition fees. This is why you have our getting student loans during chapter 13 article to show you what to do and also lets you in on more interesting and useful information.
Having a brighter future is very important and trust me when i say trustees and bankruptcy judges really do not want you to go down a difficult path. Despite all of this, getting a loan while in your bankruptcy stages isn’t as easy as most people think it is. You might not be able to tell if getting student loans while in chapter 13 makes it more difficult for you to borrow more money in the future and some people might also not be able to tell if bankruptcy can be used in discharging student debts.
Getting A Student Loan While Bankrupt
The first step that should be taken here is discussing everything with your bankruptcy attorney and that way, the both of you would be able to come up with a suitable and better way to meet up with your bankruptcy trustee. Once you are in chapter 13, the trustee overseeing your case is in charge of approving your new debt. However, you would also be required to bring forward a strong plan that would be pleasing to the trustee and to the lender. The bankruptcy trustee should be convinced in the following aspects;
- The possibility of chasing a college degree and it ends up endangering your effort in paying back your student debt
- If student loan repayment and chapter 13 repayment coincides
- The possibility of getting employment opportunities through earning this particular degree
- If getting a new job would help you in repaying your student loans
Getting Student Loans During Chapter 13
Is it possible for bankruptcy to cancel out all of the student debts that you have accumulated? Well, what you should know is that during the chapter 13 bankruptcy process, not all student debts get discharged. However, if you are found worthy of the chapter 13 then you get an automatic stay which prevents all of your creditors from getting at you one way or the other for their money. Furthermore, all of your debts get bundled up and then, a repayment plan is setup which would help you complete your payment.
Even though it might take up to five years (repayment plan) for you to clear out all of your debts, all non priority debts can be discharged. Even though private student loans and federal loans are considered to be non priority debts, they still do not get discharged using bankruptcy and the best way for them to get discharged is if you can be able to prove to any judge you could face undue hardship if you try repaying them. Proving undue hardship in a court is very difficult and bankruptcy judges do not easily grant this sort of relief.
Using Bankruptcy To Manage Your Student Debt
The bankruptcy process doesn’t always discharge the private and federal student loan debts but filing for chapter 13 is useful in managing repayment in several ways;
- Having an automatic stay provides you with enough time to pay up and at this point, your creditors do not have the avenue or rights to harass you
- You can be able to set up a better repayment plan which would help in addressing all of your debt that is being owed. Another importance of chapter 13 is it helps in delaying or reducing regular payments which student loans requires
Lastly, we also want to tell you that you have a slim chance of having a private student loan approved if you are going through the bankruptcy process. In this case, the loan process is built based on trust and if you go ahead to declare bankruptcy then your credit report is going to get affected and you end up breaking the trust. Having a past history of struggling to pay your debt may signal off your lender that you might not meet up with repayment in the future. Working to improve your credit and gaining back trust would help in this case.