Dealing With Student Loan Debt After Bankruptcy

28 Jul Dealing With Student Loan Debt After Bankruptcy

If you are planning on filing Chapter 7 bankruptcy, you probably know that most of your debts will be discharged. There are some debts, though, that bankruptcy will not erase. Most notably, in many instances, you will still retain student loan debts. This can prove to be a quite a challenge, especially if you owe several thousand dollars for your college education.

Although you typically cannot discharge your student loan debts, there are still a few options you can take advantage of to keep from getting into further financial trouble. For example, you may be able to apply for a forbearance if you find you can’t make your student loan payments.

A forbearance postpones your payments for a short period of time, usually between six and twelve months, giving you time to get your post-bankruptcy finances in order. Bear in mind, though, that your payments will be higher after the forbearance, because they will continue to accrue interest.

If you are unemployed, you may also be able to obtain a hardship deferment. This frees you from making payments for a short period (usually six months), but your lender may require that you submit proof that you are actively seeking work.

A student loan consolidation is another option that can help you effectively manage your student loan debt. Consolidations are credit based, so you may have to wait a year or two after your bankruptcy discharge to take advantage of this option. If you can get a consolidation loan, though, all of your student loans will be lumped together, and you will only have one payment each month. More importantly, you can use a loan consolidation to extend the term of your loan to thirty years, instead of ten. Although you will pay significantly more in interest, this will serve to reduce your monthly payments.

Although student loans usually can’t be erased through bankruptcy, these strategies can help you manage your student loan debts, giving you the chance to rebuild your financial stability.

For more information on fighting back against harassing bill collectors go to and download a copy of my free book, Escape from the Slithering Bottom Feeders: How to Stop Harassing Bill Collectors and Fight Back Legally and Effectively So You Can Sleep Better at Night.

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Jay S. Fleischman is a bankruptcy lawyer with offices in Los Angeles and New York. He can often be found on Google+ and Twitter, where he shares information about consumer protection issues and personal finance.

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