Why Can't You Include Student Loans in Bankruptcy?

why can't you inlcude student loans in bankruptcyIf you are considering filing for bankruptcy, you may be wondering: Does filing for bankruptcy get rid of my student loans?

Unfortunately, student loans are usually not discharged in the case of bankruptcy.  According to Chapter 7 Bankruptcy law the only time a student loan might be discharged is if it would cause the debtor “undue hardships”.  The same basic rule also applies to Chapter 13 Bankruptcy cases.  

Discharging student loans became popular during the 1970s, when students would file for bankruptcy soon after they finished their pricey education.  They would do so before they started earning so that they could get the loan out of the way.  However, the requirements for discharging student loans were changed in 1998.

According to these new changes, your student loan will only be discharged if the bankruptcy court is convinced that paying back the loan would bring about undue hardships for you or the people who are dependent on you. 

There are three things that would are used to determine whether a person is eligible to have their student loan discharged or not:

  1. Will repaying your student loans prevent you from maintaining a minimal standard of living?
  2. Will it be difficult for you to maintain your minimal standard of living over the repayment period?
  3. Did you make an effort to repay the loan before filing bankruptcy? Have you been repaying your loan for at least 5 years?

Even if you are unable to fully discharge your student loan debt by filing bankruptcy, there are many other options for dealing with student loans including deferments and forebearance.

Even though it is difficult, you should still discuss your student loans with your Bankruptcy attorney.  They know the law and can help you get the most benefit out of filing for bankruptcy.

If you are considering Bankruptcy, there are alternatives you should consider.  Our Debt Solutions Specialist can discuss your financial situation with you, and help you determine if Debt Settlement or Debt Consolidation would be a good solution for you! Give us a call at 1-877-492-4109 or click the link below.

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Tags: alternatives to bankruptcy, Debt Settlement Services, debt consolidation program, include student loans in bankruptcy

5 Benefits to Debt Consolidation Loans

debt consolidation loansDo you find it difficult to manage multiple debt payments and due dates each month?  If you don't stay organized you can easily pay your bills late and that can add up to hundreds of dollars in late and over limit fees. 

One way to help with this problem is to combine your debt into one low interest Debt Consolidation Loan. 


5 Benefits to Debt Consolidation Loans

#1 Consolidate Your Debts Into One Monthly Payment: Using debt consolidation loans, you can pay off all or most of your unsecured bills (credit cards, payday loans, medical bills etc) at once. You're then left with a single loan, which you'll repay through an affordable payment plan.

#2 Eliminate collection calls: You can use your Debt Consolidation Loan to pay off debts that are past due or in collections.  This will eliminate harrassing calls and letters from your creditors and collection agencies.

#3 Reduce Your Interest Rate: Debt Consolidation Loans are often offered at lower rates than credit cards.  By combining your high interest credit debt into a low interest Debt Consolidation Loan, you will reduce your monthly payment and save money.

#4 Easier Monthly Budgeting: A Debt Consolidation Loan offers a monthly payment that stays the same over the course of the loan.  This one consistent monthly payment makes monthly budgeting much easier.  Create your household budget using this FREE BUDGET WORKSHEET.

#5 Improve Your Credit Score: When you pay off multiple debts with a single Debt Consolidation loan, and making consistent monthly payments, your credit score will improve quickly.

It can be difficult to qualify for a Debt Consolidation loan. If you are not able to qualify for a Debt Consolidation loan, you may want to consider enrolling in a Debt Consolidation Program instead.  These programs combine your monthly debt payments into one lower payment while reducing your interest rate and eliminating your debt in just 3-5 years!

For more information on Debt Consolidation and other Debt Elimination programs, please give us a call or simply click on the link below for a FREE DEBT ELIMINATION SUMMARY!

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5 Steps to a Better Financial Future

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Follow this 5 step plan to make your personal finances healthier and build a better Financial Future for you and your family.


Step #1: Set Your Money Goals

In this first step, it is tim to sit down and really think about where you want to be financially in the future.  Think about the following questions to get you started on setting your money goals:

  • What part of your financial life was disappointing last year and what can you change so it is better next year?
  • What part of you financial life worries causes you the me the most stress, and what safety nets can you put in place to help relieve this stress?
  • What would you be proud to accomplish in the next 5 years of you financial life?

Step #2: Check Your Credit Report

Your credit report plays a huge role in your personal finances and financial future.  Each year you can pull your credit report for free from each of the three major credit reporting bureaus.  Simply go to AnnualCreditReport.com to get your Free Credit Report. 

Instead of pulling all three reprots at once, try spreading them throughout the year.  For example, pull your Equifax credit report today, then mark your calendar to pull your Experian credit report in 4 months and your Trans Union credit report in 8 months.  By doing this you will be keeping a close eye on your credit without breaking the bank!

If you want to check your credit score for free, go to CreditKarma.com

Setp #3: Research your Debt Elimination Options

If you have credit card debt, retail store cards, medical bills or other unsecured debts, you have several options available to you to help eliminate that debt once and for all while saving you time and money.

  • If you plan to pay off your debt on your own, consider adjusting how you make your payments.  The Debt Snowball is a popular method to help you pay down your debts fast. 
  • If you are able to keep up with your payments, but your high interest rates are keeping you from eliminating your debt, a Debt Consolidation Program may be a great option for you. 
  • If you are struggling to keep up with your minimum payments or you have already fallen behind, you should consider enrolling in a Debt Settlement Program which can reduce your monthy payments and eliminate your debt for much less than what you owe!

Step #4: Create a Budget

If you are like so many others out there living paycheck to paycheck, creating a budget can help you to start saving for your retirement and start building an emergency fund.

Start by writing down everything you spend for an entire month.  Once you have done this, take a look at how you’ve been spending your money, and see where you can cut back in order to put some money into savings or pay down your debt.

Step #5: Set up Automatic Retirement Contributions

Participating in a retirement plan at work is a great way to make sure you’re consistently investing for your future. If you don’t have a workplace plan you can invest in an IRA as long as you have some amount of earned income.

Set up a direct deposit so a percentage of your paycheck is automatically invested in your IRA. Or set up an automatic transfer from your bank account to your IRA once a month or every payday. Automating your financial goals is the best way to make sure you accomplish them.

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Tags: debt snowball, debt settlement, debt consolidation program, budget, financial future