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Can I discharge student loans in bankruptcy

Asked over 3 years ago - Phoenix, AZ

I am recently divorced (1 month now) and have $80,000 in student loan debt, $66,000 in credit card/line of credit debt, $26,000 in business debt (i closed the business over a year ago) and a Truck which still has a balance of $7,300. I get to keep my Truck in the divorce but can't qualify for a new loan due to my amount of debt! I make $40,000 a year and have been taking cash advances off my credit cards to help make all my monthly payments but am just about maxed out on all my cards and I only have about $10,000 left in the bank which will only last a few more months. I have a LLC business I just started but don't think i'll be making any money from it for a few years and need to do something immediately. I don't own any property and my personal assets are under $5,000 (TV, computer, furniture etc). Is Chapter 7 the right move for me? Also, I have been reading that student loans are not allowed in Chapter 7. My monthly expenses (if I didn't have any credit payments or student loans) would be around $2500 a month. and I only bring home about $2400 a month. What other choices do I have for those student loans. The payments for both of them are $850 a month right now.

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Attorney answers (2)

Lesley Abigail Hoenig

Reputation Level 14

Answered over 3 years ago. Bankruptcy Attorney in Mount Pleasant, MI.

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If you haven't already, try and consolidate your student loans. They should be like half what your paying a month after wards. Also, if you still can't afford to pay them right now, get a hardship deferment. While they aren't dischargeable, there are many ways to defer payment when you are unable to pay. The lenders will work with you. You will be able to get rid of other debts with bankruptcy, but you need to consult a local bankruptcy attorney to make sure it is the right way to go. Especially if any of these debts are addressed in your marital settlement agreement/divorce judgment.

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Gabriel Cheong

Reputation Level 15

Answered over 3 years ago. Divorce / Separation Lawyer in Quincy, MA.

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Note that I am not licensed to practice in your state.

It sounds like you are swamped with debt and yet you started a business. How did that come about? Do you have a business plan and if so, how did you expect to finance the business? Does the business have a small business loan on it?

Judging just from the facts you've given, I'm not sure you should be running a business at all. You might need to simply get a job (or 2 or 3 jobs) and start paying off your student loan. It is true that student loans are not dischargable in bankruptcy. You can discharge all other debts but the student loan will be with you until you pay it off.

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