Can Bankruptcy Keep You From Getting Student Loans?

by Douglas Jacobs, Esq.

October 11, 2009

Can Bankruptcy keep you from getting student loans?
No.  That’s the simple answer.  If the loan is either funded or guaranteed by the government, you can’t be denied your right to get such a loan simply because you filed for, or were a debtor in a bankruptcy.
In most cases, getting loans immediately after filing for bankruptcy can be difficult, or you can end up paying higher interest rates.  But a specific provision in the Bankruptcy code- 11USC§525 (c) – makes it unlawful for an entity to deny a loan to anyone because he or she is or was a debtor under the Bankruptcy Act.
The provision in the code even extends to persons “…with whom the debtor or bankrupt has been associated” (11 USC §525(c)) if the denial was because of the bankruptcy.
Student loans are not necessarily a good way to fund anything, but sometimes they are the only avenue to a decent education.  At least a previous bankruptcy action won’t keep you from getting one if you need it.

No.  That’s the simple answer.  If the loan is either funded or guaranteed by the government, you can’t be denied your right to get such a loan simply because you filed for, or were a debtor in a bankruptcy.

In most cases, getting loans immediately after filing for bankruptcy can be difficult, or you can end up paying higher interest rates.  But a specific provision in the Bankruptcy code- 11USC§525 (c) – makes it unlawful for an entity to deny a loan to anyone because he or she is or was a debtor under the Bankruptcy Act.

The provision in the code even extends to persons “…with whom the debtor or bankrupt has been associated” (11 USC §525(c)) if the denial was because of the bankruptcy.

Student loans are not necessarily a good way to fund anything, but sometimes they are the only avenue to a decent education.  At least a previous bankruptcy action won’t keep you from getting one if you need it.

Related Posts Plugin for WordPress, Blogger...
The following two tabs change content below.
Douglas Jacobs is a California bankruptcy attorney and partner in the Chico law firm of Jacobs, Anderson, Potter & Chaplin. Since 1988, Mr. Jacobs has taught Constitutional law and Debtor-Creditor/Bankruptcy law at the Cal Northern School of Law. He has served as Dean of Students since 1994. He is a frequent lecturer on the subject of consumer bankruptcy law, and has spoken at both state and national levels.

Last modified: October 11, 2009