financing your dream
Why Bankruptcy Doesn’t Work
Borrowers and parents who have co-signed on student loans sometimes think bankruptcy will solve their problems. Why isn’t this true?
- Bankruptcy is illegal in some states.
- Student loan debt is not considered during bankruptcy.
- Student loans generally can’t be discharged like other debts.
“C” is correct. Student loan debt usually can’t be discharged through Chapter 7 bankruptcy. Student loans can be included in a Chapter 13 repayment plan, but they must be repaid in full. When borrowers fall behind, it’s best to seek financial advice and support from a reputable nonprofit credit counseling agency like Guidewell Financial Solutions.