For anyone familiar with bankruptcy and student loans, you may be wondering how these two topics could have anything in common. First, bankruptcy is designed to relieve you of your debt. On the other hand, incurring student loans places you in debt. Furthermore, student loans are typically non-dischargeable (there are exceptions in some cases) in bankruptcy making them one of the few unsecured debts that survive a bankruptcy filing. It would seem that these two concepts would be the exact opposite of each other; however, there are similarities between bankruptcy and student loans.
Provides Assistance for Those Seeking Help
While bankruptcy and student loans may share many differences, some elements are common to both. For example, filing for bankruptcy relief and incurring student loan debt are both designed to assist you in improving your future financial situation.
- A bankruptcy case stops creditor harassment and allows you to wipe out your debts or reorganize them into a manageable bankruptcy plan. Student loans help individuals pay tuition payments that they would not otherwise have been able to afford without assistance so that they can earn a better income by receiving additional education, skills and training.
- Bankruptcy and student loans provide the opportunity for a healthier financial future to individuals who may be struggling to pay bills. When you no longer have the ability to pay your monthly bills while maintaining a basic standard of living, bankruptcy provides a fresh start by wiping out unsecured debts so that you can recover and rebuild your finances. Likewise, someone applying for student loans is doing so in order to gain an education for better career opportunities to provide for himself, his family and eventually, his retirement.
More Than One Helpful Option to Choose
Bankruptcy and student loans also consist of options.
A consumer searching for debt relief has two options for filing bankruptcy. A Chapter 7 bankruptcy, otherwise known as a liquidation, is used when you do not have the ability to pay basic living expenses and unsecured debts. A Chapter 13 bankruptcy case, otherwise known as a reorganization, allows you to propose a manageable bankruptcy plan that gives you the ability to provide for your basic living expenses while paying back some or all of your unsecured debts.
Likewise, there are two types of student loans - - federal student loans and private student loans. Federal student loans are backed by and regulated by the federal government and are based on financial need. Private student loans are not federal aid, but are loans issued by private companies directly to applicants. Both types of student loans help you achieve your goals, just as both types of bankruptcy cases can assist you with debt problems.
Having Someone In Your Corner Improves Your Situation
Filing a bankruptcy case and applying for student loans can be difficult; having someone to help you is a much better way to achieve the desired result.
For a student loan, this may mean having a co-signer on the loan to improve the student’s chance of obtaining a loan with a lower interest rate.
With regard to a bankruptcy filing, having an experienced bankruptcy attorney on your side improves your chances of wiping out your debt while protecting your assets. Bankruptcy law is complicated and the number of forms that are required to be filed in a bankruptcy case are numerous and can be confusing. An experienced bankruptcy attorney is the one person in the system that is working for your benefit, to protect you and your assets from creditors. While a bankruptcy attorney may not be able to protect everything that you own or obtain a discharge for all of your debts, he will provide you with the best advice and guidance as you navigate the bankruptcy process.
Gaining Education and Skills For a Better Future
Our last similarity between bankruptcy and student loans has to do with education. Obviously, obtaining a student loan will enable you to gain the knowledge and expertise in a chosen field, to excel and prosper in the future. Filing a bankruptcy case also provides valuable education through required credit counseling courses and financial management education. The Bankruptcy Code requires that every debtor complete a mandatory credit counseling course prior to filing a bankruptcy case and a mandatory financial management course prior to receiving a bankruptcy discharge. Both courses are designed to educate you about using debt wisely and managing your finances better in the future.
While you may not be able to discharge all of your student loans, our bankruptcy attorneys can explain how a bankruptcy will help you handle those loans better by discharging other debts. Schedule an appointment today to discuss bankruptcy and your student loans in more detail.