Can Bankruptcy Deal with Student Loans?
Basically, student loans, whether they are government student loans or private student loans are not dischargeable in bankruptcy. This literally means you will have to pay your student loans. There are many changes going on in the student loan industry but many abuses exist. What most parents do not understand is that if they guarantee their son or daughter's student loan, not only is the loan non- dischargeable but the guarantee is also non-dischargeable. Hence, although in most other situations, where a person guarantees any other types of loan the personal guarantee is dischargeable student loan guaranties are not. While this is contrary to common advice, we feel that student loans should only be used as a last resort. Additionally, a student loan should never be taken out to pay for anything but education. It should not be used to pay other bills.
While student loans are not dischargeable, certain things can be done, especially in Chapter 13 bankruptcies to pay the loans within different time frames and in different amounts. We can really only deal with those issues in specific cases because the financial planning necessary is tied to specific facts and not generalities. If you have questions about student loans and the marshalling of payments, we will be happy to discuss this with you in the context of a bankruptcy proceeding.
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Contact bankruptcy attorney C. David Ward or Joseph D. Lovelace for a consultation today.
Illini Legal Services is engaged in the private practice of law and is not a public legal aid agency. We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.
