Many college students are unable to fully fund their education through scholarships and savings, which is why thousands of students graduate college already deep in debt with student loans. Student loans are quite common, but many people who take on this debt do not realize the significant impact that it can have for years, even decades down the road.
If you are a college graduate and find yourself unable to make your monthly student loan payment, you may be wondering about the legal options available to you. Bankruptcy is a way that many Ohio consumers confront their debt, but in most cases, student loans are not dischargeable in bankruptcy.
Possible ways to confront student loan debt
If you are unable to make your monthly student loan payment, chances are that you are also unable to meet other financial obligations. Bankruptcy may not allow you to discharge student loans, but it can offer you options for other past-due debt. Consider the following:
- Chapter 7: Chapter 7 allows for the discharge of unsecured debt, such as credit cards and medical bills. Often called liquidation bankruptcy, this process can be completed in a matter of a few months. Not every applicant who applies for Chapter 7 will be eligible.
By discharging certain debts, Chapter 7 bankruptcy may allow you the financial freedom to effectively confront other types of balances, such as your student loans.
- Chapter 13: Chapter 13 bankruptcy is an option for individuals who are not eligible for Chapter 7 bankruptcy. This process takes anywhere from three to five years, and applicants may be able to protect certain assets, such as a home.
Student loan debt is not dischargeable through Chapter 13 bankruptcy, but it may be possible to defer payments while the bankruptcy process is underway. If approved for a deferral, you may only have to pay interest.
Bankruptcy is not the best choice for everyone, but it may offer you a way to deal with your debt burden outside of your student loans. A complete case evaluation with an experienced, honest attorney can help you make a beneficial decision for your individual situation.
The foundation for a strong financial future
Student loans are a major financial problem for millions of Americans, but many do not take proactive steps to find out how they can get ahead and deal with this issue in an effective manner. Bankruptcy may not get rid of your student loans, but it can help you achieve the financial freedom to pay your balance without worry. For many, bankruptcy is the key to a strong financial future.