Most recent college graduates are well aware that it is very difficult to discharge student loan debt in bankruptcy. What most people do not realize, however, is that a filing a bankruptcy can still help you manage your student loan debt by eliminating other forms of debt, including medical bills and credit card bills. If discharging other types of debt in a Chapter 7 filing isn’t sufficient for getting your financial situation under control, a Chapter 13 filing may be even more helpful in managing all of your debt, including your student loans.
When you file a Chapter 13, you create a repayment plan. In your Chapter 13 plan, you can lower the amount of your student loan payment over a period of three to five years. Your income will determine the amount you must pay to your creditors, including your student loan lender and other unsecured creditors. While your bankruptcy case is pending, your lender is prohibited from taking any collection action against you. This means you are safe from garnishments or having your tax refund seized.
While your student loan will most likely not be paid in full during your bankruptcy and you will still be required to pay the balance after you emerge from your Chapter 13, having three to five years of reduced payments can help you get back on your feet financially. Additionally, you can discharge many other types of debts, which gets your finances back on track as well.
It is also important to mention that during your Chapter 13 case, any co-signors on your student loans are also protected. The co-debtor stay prevents the lender from taking any collection action against your co-signors as long as you are making the required payments under the Chapter 13 plan, which includes payment of your student loan debt.
If you are interested in learning more about how bankruptcy can assist with your student loan debt, call DeLadurantey Law Office for an appointment.
If you are considering filing for bankruptcy protection, let us help. We understand how important your bankruptcy case is to you, and we will handle it with the discretion and dedication that have become our calling cards. Contact the Milwaukee bankruptcy attorneys of the DeLadurantey Law Office, LLC today by calling 414-377-0518. Like us on Facebook.