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by Romiex69x on February 24th, 2008

Romiex69x

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If I file for chapter 7 Bankruptcy, will my private student loan of $18k be forgiven? How about my credit cards?

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  • by Agrippina on February 24th, 2008

    Agrippina

    Unfortunately, most student loan debt is not dischargeable in bankruptcy, primarily because this debt, even if "private", typically still is guaranteed by the U.S. government, which makes the bankruptcy laws and has no intention of being left holding the bag. As to your other debt, in 2005 the bankruptcy laws were changed (due to lobbying by the credit card companies) to make personal bankruptcy a much more onerous and expensive process for people in financial trouble. As a result, most people are forced into an expensive "repayment" program under Chapter 13 of the Bankruptcy Code rather than being allowed to discharge the debts under Chapter 7 of the Code. Accordingly, filing bankruptcy may actually leave you poorer than you were before, since you must pay the cost of administering this "repayment" program.

    Please seek a consultation with a bankruptcy attorney AND with a non-profit credit counseling service to attempt to find the best way for you to get back on your feet. It may be that restructuring your debt through the non-profit credit counseling agency will be the better option for you.

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    • If you file for bankruptcy under Chapter 7, you should be aware that not all debts are eliminated (or "discharged") once the bankruptcy process is complete. Generally speaking, in a Chapter 7 proceeding, the following debts are not discharged:

      * Debts or creditors not listed on the schedules filed at the outset of the case.

      * Most student loans, unless repayment would cause the debtor and his or her dependents undue hardship (more on student loans below).

      * Recent federal, state, and local taxes.

      * Child support and spousal maintenance (alimony).

      * Government-imposed restitution, fines, and penalties.

      * Court fees.

      * Debts resulting from driving while intoxicated.

      * Debts not dischargeable in a previous bankruptcy because of the debtor's fraud.

      Student Loans

      As noted in the above list, educational loans are generally not discharged by a Chapter 7 bankruptcy. They may be dischargeable, however, if the court finds that paying off the loa

      Kelly Robbennolt

      by Kelly Robbennolt on October 23rd, 2009

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