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Filing Bankruptcy With Student Loans

There are more people filing for bankruptcy more than ever before. The laws have changed over the years. It used to be that if you were in over your head and you filed bankruptcy, it would wipe away any debt that you had. But that is no longer so. If you file for bankruptcy these days, you have to consult with a debt consolidator and you have to make arrangements to repay your debt. These days student loans are not included in any bankruptcy, you are responsible for repayment of the loan, no matter what. Today the average of a student loan is about $ 19,000.

There are some circumstances where student loan forgiveness may apply. This doesnít happen too often so donít get your hopes up. Student loan forgiveness often occurs in the event of death or in some cases, some programs like Nursing and Teaching will offer forgiveness if you participate in their program. If you are in Teaching or Nursing Programs in school, ask your department chairperson for more information. Now if you are just declaring bankruptcy, loan forgiveness is a rarity. The court will have to decide if your student loans will cause you more hardship than not. It could go either way.

If you are looking to have your loan cancelled then you will need a miracle. This is very, very rarely given. The idea of taking out these student loans is that you are getting an education from them. If you canít afford to pay them back then, you should not have taken them out. If you default on a student loan and it is a creditbased loan, then it may have an effect on your credit report for many years to come.

There is hope; there is a way to get your student loans paid off even in bankruptcy. If you decide to file for bankruptcy, the court will list your student loans separately, in this style of court, a credit card debt is the least looked at if there are other debts. If you are filing a Chapter 13, then the court will allow you to reorganize your debts and your monthly payments will become separate from credit card debts.

There are other ways to help you take care of your loans besides bankruptcy. There are student loan forbearance, loan deferment and even loan consolidation programs. The idea of these programs is for you to let the lenders know that there is a problem before it turns into a bankruptcy issue. They are willing to work with you if you contact them ahead of time.

Not everyone is going to have a smooth time paying off their loans. In this economy, the best way to start repaying off your loans is to start saving while you are still in school. Donít wait until the loan becomes due to start saving. Read the terms of the student loans before you sign them, so in the future if you have a problem you will know what to do.
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