Struggling to pay student loans is a very common issue today, and many people are looking for ways to get out of repaying this debt. While it is not easy to find a method that works for this, there is a chance you might be able to use bankruptcy to help you with this. Before you choose to do this, you should meet with a bankruptcy lawyer to find out which branch to use and if it will actually help you find relief from the thousands of dollars you owe for your student loans.
Why bankruptcy doesn't always work
When you file for bankruptcy, you must choose whether you will use Chapter 7 or Chapter 13. Chapter 13 bankruptcy allows you to repay debts through a repayment plan, whereas Chapter 7 is designed to forgive debts you owe. The problem with both types is that student loan debt typically is considered a priority debt, which means you will likely have to repay it in full no matter which branch of bankruptcy you use.
How Chapter 13 can help you
Chapter 13 is often used by people that have a lot of priority debts, such as student loans. Through a Chapter 13 plan, you will have the ability to slowly repay debts you have. The benefit of this is that it may reduce your monthly payments for a period of three to five years. During this time, you will still be making payments towards your debts, including your student loans, but it may give you the time you need to catch up on your bills and get ahead a little bit.
At the end of your Chapter 13 repayment plan, you will still owe the full balance remaining on your student loans, and you will have to once again start making the normal payments you had prior to filing for bankruptcy.
How Chapter 7 can help you
With Chapter 7, there is a chance you could get the student loan debts forgiven. To do this, you will have to prove that the debt is causing an undue hardship. This means that you must prove that you cannot repay the debt and that there is no hope in the future that you will be in a better position to be able to repay the debt. Proving this is not easy; but, if you can do this, you will be off the hook for all your student loans.
If you are trapped with student loans that you cannot repay, talk to a bankruptcy attorney like one from D Derk Demaree Attorney at Law. This is the only way you will be able to find out if bankruptcy could be the best option for you.