Does Bankruptcy Eliminate My Student Debt?
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.