July 20th, 2010
Generally, government backed debts such as student loans are not dischargeable in a bankruptcy except for very specific exceptions. If you filed a Chapter 7 bankruptcy petition before 1998, then the student loans could be discharged through the Chapter 7 bankruptcy if the first payment on the loan became due more than seven years prior to the date of filing. However, President Clinton signed a new bankruptcy law in 1998 that changed the law and effectually disqualified student loans from being discharged.
However, there is still a few methods of discharging some of the student loan debts through the use of Chapter 13 bankruptcy. Under Chapter 13 bankruptcy, it is possible to consolidate your student loan debt, along with any other outstanding debt and credit card bills, and arrange for a Court Approved repayment plan. The repayment plan is typically interest free which can ultimately save you significant amounts over the life of the loan. Additionally, it relieves you are the possibility of going through the burdens and pains of garnishments, harassment and other collection efforts by collection agencies. It is also possible to reduce the amount of money you owe on student loans during the course of your Chapter 13 bankruptcy so that your consolidation payment is lower than it was was previous to the Chapter 13 Bankruptcy filing.
Read More: [Can I Discharge My Student Loans in Bankruptcy]
Tags: Chapter 13 Bankruptcy, Chapter 7 Bankruptcy, New York Bankruptcy Lawyers
