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Reasons Why Student Loan Can’t be filed for Bankruptcy

When it comes to student loans, you need to be very cautious and before you even jump the gun; you must first draw up a definitive plan that will help you repay the loan effectively. This does not imply that failure to do so will result in grave issues. However, you will face certain financial issues that you must not face at a young age. Essentially, if you take a student loan, the period for which you repay the amount may increase over time in case of your inability to repay the loan. At the most you are allowed debt settlement but filing for bankruptcy is not a benefit that you can avail of. Emachines settlement is fast gaining popularity but it does not change the rules for student loans. You can, however, opt for the Chapter 13 of bankruptcy instead. As per this chapter, the amount that you pay on a monthly basis can either be brought down to a lower amount as in the case of debt settlement or the creditors may permit a slight amount of delay in the repayment process.

There are certain debts that are non-dischargeable and student loans can be effectively categorised under this. Filing for bankruptcy in case of student loans is possible however, this holds true only in very extreme situations wherein the student has suffered a severe accident leaving him disabled or a grave situation of similar magnitude. However, this does not usually happen and is a situation that occurs in extreme rarity. Therefore, you must be clear of the fact that at some point or the other you will be required to pay off your student loan.

As in the case of medical bills or those pertaining to credit cards, a student loan is always classified as a non priority unsecured debt. Therefore, based on the guidelines set by the repayment plan of Chapter 13, you need not pay off the full amount of the loan if you face financial difficulties. The repayment plan is then decided based on the incomes that you earn and the expenses that you incur. Based on the term of your chapter 13 bankruptcy, you will be given some amount of liberty in repayment in terms of the time and amount. However, once this period is over, you will be required to pay the remaining amount in full. Emachines settlement is also an option that people can avail of. Given below are some benefits of filing for the Chapter 13 of bankruptcy.

1.)   Once you file for the chapter 13 bankruptcy, you automatically get safeguarded from creditors and they are not allowed to call, harass or trouble you with incessant phone calls for loan repayment. This helps control the situation and prevents you from going into panic mode. Therefore, it leaves you with ample time to devise a strategy to repay the loans without the creditors breathing down on your neck. You can buy time of up to 5 years to fight off the creditors. However, this time period may vary for different people.

 

2.)   Because of the benefit provided by the automatic stay of chapter 13 bankruptcy, you are permitted to not make any repayment for your student loan for the given time period of the bankruptcy. This is solely dependent on the income that you earn during this period. However, this is only limited to the period of bankruptcy. You must not forget the fact that the longer you delay, greater will be the interest that will keep piling up during this period, which you will be required to pay in full. Therefore, you need to be very cautious especially when dealing with student loans.

 

Author’s bio:

Millicent Greer is a debt settlement lawyer who has previously dealt with emachines settlement. She offers her services for a wide spectrum of debt related issues including settlement, bankruptcy and even mortgage. She also loves baking and runs a food blog. To know more visit http://debt-settlement-review.toptenreviews.com/