Some people file for
bankruptcy under the assumption that their student debt will be eliminated. But does
this work? In this blog, we explain if it is actually possible to have
your student debts eliminated through bankruptcy.
Declaring bankruptcy will not automatically discharge your student loans.
Under a Chapter 13 Bankruptcy, your student debt is typically added into
your repayment plan. However, an automatic stay will be granted to you
if your bankruptcy is approved. The automatic stay will prohibit creditors
from trying to collect on your student debts. Student loans are categorized
as “nonpriority secured debt” in Chapter 13 Bankruptcy. Although
the repayment plan does not require you to pay off the full amount of
your student debt, your student loans will continue to gain interest.
Under a Chapter 7 Bankruptcy, all of your assets are liquidated. Similar
to Chapter 13, all collection of your student debts must be stopped by
creditors. Your student loan debt can sometimes be discharged if you file
a Complaint to Determine Dischargeability. If you can demonstrate extreme
financial hardship, the court might allow for your student debt to be
discharged. While having your student debts discharged is rare, it does
happen from time to time.
If you are thinking of filing for bankruptcy to have your student debts
discharged, you should immediately consult with an experienced attorney.
At the Albaugh Law Firm, we help people throughout Florida who find themselves
overwhelmed with debt. Our lawyers have 70+ years of combined legal experience
and we know what to expect when it comes to defending our client’s
debts. Let us put our skills to work for you today.
Contact our St. Augustine team of bankruptcy attorneys
to schedule a free consultation.