Under chapter 13 you have a greater chance of holding on to these assets if you can keep up with your new repayment plan. However you likely will owe income taxes on the.
can you file bankruptcy on your student loans
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You will make these court determined payments while you are in the chapter 13 plan usually for three to five years.
Can you file bankruptcy on your student loans. You will still owe the remainder of your student loans when you come out of bankruptcy but you can try at this point to discharge the remainder based on undue hardship. Thats a personal decision based on your specific life circumstances. Should you file for bankruptcy to discharge your student loans.
If you cant discharge your student loans chapter 13 bankruptcy provides some other ways that can help. When you file for bankruptcy it can be costly and take. Another key difference involves unsecured personal loans in which theres a cosigner who agreed to help repay if you cant.
After a certain period of time such as 20 or 25 years for example your federal student loans not private student loans can be forgiven. Your attorney can help determine the type of consumer bankruptcy thats best for. Once your bankruptcy case is filed you then need to file a separate lawsuit within the bankruptcy court against the lender of your student loan.
You must file for bankruptcy before your student loans can be discharged. Also if you are successful in filing for bankruptcy protection your student loan servicer wont be able to garnish your wages. If your payments are still too high and you dont meet the requirements for discharging student loans in bankruptcy as outlined below dont hesitate to file for deferment or forbearance.
For example youll likely be able to pay a reduced amount during your chapter 13 plan although youll be on the hook for whatever amount is left after your repayment period ends. Currently the laws about federal student loan bankruptcy discharges state that you cant wipe out your loans unless theyre so expensive and youre so impoverished that they may literally lead to your death by placing an undue hardship on your ability to cover costs for basic needs like food and shelter. Under chapter 13 bankruptcy creditors cant call your cosigner during your bankruptcy period.
This lawsuit is called an adversary proceeding and it asks the court to find that repaying your student loans would present an undue hardship. File for chapter 7 or 13 bankruptcy. When you file for bankruptcy you can also rack up significant legal and court fees along the way.
That said if youre defaulting on debt then your credit score has already taken a hit.