Bankruptcy And Student Loans
Whenever a person considers filing for personal bankruptcy and student loans make up a good part of their debt, there is a good chance the loans will not be discharged. In 1998, when the government’s rules regarding bankruptcy were changed, student loans were ruled to be non-dischargeable as many financial institutions were losing million of dollars.
In addition, the government was losing millions of dollars on loans that were guaranteed by the federal government when the loans were discharged through bankruptcy.
Today, the person claiming Chapter 7 bankruptcy has to show that an undue financial hardship will result if the loans are not discharged. In many cases with bankruptcy. where student loans make up a large portion of the individual’s debt, a portion of the loan may be discharged by the judge, but most of the loan will remain a legal debt.
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