Can Bankruptcy Help Me Discharge My Student Loan Debt?

Do you feel lost in your student loan debt? Don't worry you are not alone. It's easy to push them to the back burner when you are trying to cover other bills like rent health insurance, car payments, etc.

Although student loans may not seem as important as other bills you have coming your way, they can get you in just as much hot water and I mean quick. Getting behind on payments toward your defaulted student loans can end with bill collectors harassing you, lawsuits, judgments and even your wages being garnished or your bank account frozen. The courts can take future tax refunds you may receive in order to get their money.

You may be wondering if you have options if you are in a bind with your defaulted student loans. Some common questions of defaulted student loans are: should I file bankruptcy, or how do I stop bill collectors from calling me?

When you miss payments on your student loans, you are given another opportunity to pay off the loan, which is a rare occurrence. This process is called "rehabilitation" and many bill collectors don't want you to know about it, so they may play dumb.

A short term payment schedule is instated when you rehabilitate your student loans. If you pay the loan in full, it's taken out of the hands of bill collectors, which also stops the constant calls from the collection agencies. They try to keep this process quiet because every time a collection agency goes through it, they lose the 25% bounty they would've received if the full loan amount was collected.

You should call your debt collector and ask to "rehabilitate" your loan, and as long as they cooperate, you may not even need a lawyer. In order to successfully rehabilitate, you need to make 9 full payments over a 10 month period, and if you fail to do so, you could be in trouble. It is difficult to get your student loans discharged by filing bankruptcy.Serious undue hardship must be proven, which means repaying your student loans will cause you and your family to live below the minimal standard of living. You better have stopped breathing to prove undue hardship, it is very difficult to use this to discharge your student loan debt.

Filing for bankruptcy may not be the right decision if most of your debt includes defaulted student loans, so you may not even need a lawyer. On the other hand, if they consist of only part of your larger financial debt, filing for Chapter 7 bankruptcy may help you towards a fresh start. Before you speak with any bankruptcy lawyer, sign any forms to agree to consolidate your debt or talk to any bill collector, you need to gather information so you can arm yourself with the right questions to ask before you make a decision you later regret.