Student Loans and Bankruptcy
Although students loans are generally not dischargeable in bankruptcy you can still get some relief by invoking the automatic stay and reducing the monthly payment and stopping collection activity and wage garnishments.
Student Loan DebtsMost people incur student loan debt with the best intentions and highest hopes however, if you can not find work or do not find the job or income level that you had hoped for, repayment of those student loans may become difficult or impossible when they become due. The collection calls and wage garnishments start making it more difficult for you to concentrate on finding your first job in your field or focusing on advancing yourself in your career. It can quickly put you in a rut where you feel trapped and hopeless. Chapter 13 Bankruptcy may be an option when it comes to managing student loan debts.
Bankruptcy Automatic Stay and Student LoansThe automatic stay imposed by the bankruptcy court prohibits student loan lenders from collecting while you are in bankruptcy which is usually 3 to 5 years. You will not be required to pay your student loans and can stop wage garnishments and collection calls. You would make a smaller and affordable payment (which you and your attorney propose) to the bankruptcy trustee and reduce payments to an amount that you can reasonably afford. You can pay back a portion or all of your student loan debt through a Chapter 13 Bankruptcy plan. If you have more than one student loan you can “consolidate” your payments and making one monthly payment through a Chapter 13 Bankruptcy Plan.