Guidance for Student Loan Debt After Bankruptcy

Are you facing the challenge of 130,000 in defaulted student loan debt after filing for bankruptcy? This article aims to provide a comprehensive guide to help you understand your options and navigate this difficult situation.

Understanding the Law and Your Debt

When you file for bankruptcy, the court decides what happens with your other debts. The bankruptcy process does not consider your graduation status, and most likely, you will be required to resume payments on your student loans. This means you should contact the loan service company if you haven't already tried the rehabilitation of your student loans.

Common Questions and Concerns

How is it possible to accumulate such a large amount of student loan debt without the means to pay? Why didn't you complete your degree? These are valid questions, and the answers can be complex. However, consulting a bankruptcy attorney is crucial to understanding your specific situation.

The Reality of Discharging Student Loans in Bankruptcy

The reality is that student loan debt is incredibly difficult to discharge through bankruptcy processes. To have your student loans discharged, you would need to prove several conditions:

You wouldn't be able to maintain a basic standard of living if you had to pay back your federal student loans. You can prove that the hardship will last for a large percentage of your repayment period. You have honestly attempted to repay your federal student loans before this point.

These conditions are open to wide interpretation. The term 'basic standard of living' may be far below what you expect, and hardship is often interpreted as a disability that prevents you from working. Additionally, you need to show that you have made efforts to repay your loans, even if you have a job and have stopped making payments.

Options for Discharging Student Loans

While bankruptcy is a potential route, you may find that the bankruptcy court sets up a payment plan to manage the debt. Unfortunately, this money is likely to need to be paid back, making it crucial to discuss your options with a bankruptcy attorney.

Navigating Your Debt: Practical Steps

Alternately, you must pay off your loans. Here are some practical steps to consider:

Consult with a bankruptcy attorney to explore all available options. Refinance your loans to lower the interest rate. This can help reduce the total amount you will pay over the life of the loan. Focus on reducing your expenses and increasing your income. Simplify your lifestyle and cut unnecessary expenses, such as living with relatives, renting in a walkable neighborhood, and cutting out cable TV and data plans. Consider vocational training or obtaining a marketable certificate or associate's degree at a community college. This can help you secure better-paying jobs and improve your earning potential. Assess whether you can assist in a family business or find other income-generating opportunities.

Large debts without marketable skills can create significant hardship, but it is not the end of your life. Many people have overcome even greater challenges. Develop a realistic plan, seek advice, and persevere.

Conclusion

Dealing with 130,000 in defaulted student loan debt post-bankruptcy is a daunting task, but with a plan and professional guidance, you can find a way forward. Remember, your situation is unique, and you need to tailor your approach to what works best for you.