How To Clear Your Debt Through Bankruptcy Student Loans?
Author: Keith Lee
Most student loans that are given by governments and which cannot be easily paid back may not always be rid off even through filing bankruptcy student loans, and the only option open to such a defaulting student is proving considerable financial hardship which in it is often quite hard to prove. However, if you still want to file bankruptcy student loans, you need to prove that you are unable to pay off your student loan either according to repayment schedule, or in the coming years, and under such circumstances you need to make what is called good faith effort, which means not trying to lie to creditors, and that in spite of your best efforts, you still do not have enough funds to pay off your loan.
For those with a large student loan bankruptcy can help eliminate other unsecured loans freeing money to help off the student loans. Additionally, since the government eliminated discharging these loans through bankruptcy, other safeguards have been put into place, such as the amount of a person’s net income that can be taken through garnishment for a student loan. Depending on the circumstances, there may be some relief available for those with excessive loan balances.
Today, the person claiming Chapter 7 bankruptcy has to show that an undue financial hardship will result if the loans are not discharged. As in many cases with bankruptcy and 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. In other cases in bankruptcy and student loans are reviewed, if the loans are found to have been sold repeatedly to other lenders and with changing interest rates it is difficult to determine an exact balance, some or all of the loan may be discharged.
The fact is that according to some estimates, it is believed that only ten percent of a borrower’s pay can be used to pay off his or her student loan, which means that you should also discuss with the person or company that lent you the money to come up with a means that will help you out of your predicament. It is common to state certain reasons when filing bankruptcy student loans and these include the school or institution being closed, and also death of the borrower. Nevertheless, filing for bankruptcy student loans does not mean that financial aid administrators can refuse you a new loan because of a previous bankruptcy; though, your history of credit following your bankruptcy can decide whether you get a fresh loan or not.
Under the provisions of Chapter 13 bankruptcy, a debtor can arrange to have all of their unsecured and secured debt become part of a repayment plan through a court trustee. In these cases of bankruptcy and student loans are included, the person must meet specific criteria, for example showing they have sufficient income to make the monthly payments determined by the court to pay off the total debt within five years.
Chapter 13 Bankruptcy Is An Option
To get relief from aggressive collection actions on a student loan bankruptcy through what is called Chapter 13 may be an option. Provided the person filing for protection meets the criteria, it is possible to have a court trustee oversee loan repayments, offering bringing the person’s monthly payment schedule more in line with their income. Over the life of a chapter 13 bankruptcy, if the person’s income increases, the debtor’s can petition the court for larger payments to be made.
The best option open to you when you are planning on filing bankruptcy student loans is to consult either the lender or the administrator in your school that handles student loans as well as websites of concerned authorities to find a workable solution for your financial woes.
Article Source: http://www.articlesbase.com/finance-articles/how-to-clear-your-debt-through-bankruptcy-student-loans-308324.html
About the Author
Keith Lee has almost filed for bankruptcy but managed to come back stronger and richer.
To learn more about Bankruptcy Student Loans,
visit http://www.1StopBankruptcyGuide.com/Bankruptcy-Student-Loans.html
What is Definition of Dependent in MEEN’S TEST for bankruptcy?
I am filling Bankruptcy papers and I have a question on Mean’s Test. I have 4 Kids in college and they come home very frequently and me and my wife take care of some of their expenses but tuition and books they get through student loans. Should I include them as my dependents in Mean’s Test? Because roughly 5000 is allowed for each dependent. Their ages are 18, 20. 22.I have no money to pay to attorney and I have to do myself
Student loan payments and Chapter 7 bankrutpcy?
I would like to know if monthly student loan payment can be included in my expenses for the Chapter 7 means test.
I am fully aware that you can’t include student loans in a bankruptcy.
Chapter 7 Bankruptcy Means Test Questions.?
DISCLAIMER:
While I appreciate your “advice”, please only answer this question if you have DIRECT expertise with these questions. I’m looking for answers that are pretty solid. If you would start your answer off with “I think…” then please do not submit an answer to this question. I also am not looking for advertisements for debt consolidation or counseling. I’ve already done that and it was NOT an option. I’m filing for bankruptcy protection, but don’t want to file for Chapter 13.
I know that Student Loans cannot be discharged through bankruptcy. That is not my question.
QUESTION #1:
When filling out Schedule J for Chapter 7 bankruptcy, can you put the MONTHLY PAYMENTS on your student loans as an “other” expense? Can the monthly payments be used anywhere to reduce my Net Income so that my ending disposable income will be reduce by the amount of my monthly payments on my student loan?
I ask because since the student loans cannot be discharged, it would seem as though the monthly payments would then be part of my household budget and therefore be allowable to reduce my monthly Net Income and disposable income.
QUESTION #2:
I already pass the median income test. However, I may not pass the acceptable disposable income test. According to the test, if I have more than about $11K of disposable income over 60 months ($183/month), then I do not pass for Chapter 7 and must file Chapter 13. However, I’ve read something about a 25% rule that I don’t quite understand. I have about $130K in unsecured debt ($55K in CC debt and $75K in student loans). My understanding of this 25% rule is that if my disposable income over 60 months is less than 25% of my total unsecured debt, then I pass the means test. If that is true, then as long as I don’t have more than $540/month in disposable income, then I pass. ($130,000 * .25 = $32,500) ($32,500/60 = $541.67). Is this a correct assumption? If not, then how exactly does this 25% rule work? Am I even allowed to use my student loans to figure my total unsecured debt for the 25% rule?
EXTRA INFORMATION:
I have no assets. I currently lease a car for $300/month and rent a room in someone’s house. Before figuring for Student Loan payments as expenses, I have about $534/month in disposable income. With the student loan payments in as an expense, I’ll be down to $224/month in disposable income and the trustee will probably let me pass the disposable income portion of the means test.
$534/month in disposable income = $32,040 over 60 months
$224/month in disposable income = $13,440 over 60 months
What happens when Chapter 13 bankruptcy disposable income isn’t really disposable?
Additional Details
When I took the Means Test for Chapter 13 bankruptcy for Astoria, NY, it showed my disposable income as being much higher than it actually is. This is because they didn’t deduct my 401k contributions or my student loan payments. If I file for Chapter 13, will I be expected to stop contributing to my retirement fund and stop making student loan payments for five years in order to repay my debts?
Can anyone answer a question about bankruptcy, student loans and means testing?
If you can answer specific to New York State, great, but if you only know about it where you are, let me know and say where that is, if you wouldn’t mind.
This is my question. Please listen carefully because I am NOT ASKING about discharging of student loans in bankruptcy. NOT ASKING that. Already know you can’t except under extremely hard to achieve circumstances.
I am asking if judges when applying means tests to a bankruptcy applicant take into account one’s student loan burden. My student loans could easily take forever to repay.
Check the sites thoroughly. It’s an excellent site with some wonderful options for you. It will definitely help you. Have a look.
http://bankruptcy-info.we.bs/
http://www.loan-house.info/2009/09/choosing-right-bankruptcy-attorney.html
The student loan can not go under “other”. It goes in the column for creditors claims against you. You usually can not discharge the student loans if they were federally backed.
You are trying to squeeze into the median threshold. That is not a good idea. Judges have seen this a million times. From what you describe , you are going to have to agree to pay back some debts. That means that Chapter 7 is out. But you have one advantage. The bankruptcy courts are swamped. They can’t be as thorough as they would like..
In order to be a dependent, if someone is 18+ you have to pay for half or more of their expenses. Since they pay for their own tuition and books through student loans and don’t live with you, it doesn’t sound like you can count them. But you may be able to get something for their expenses that you do pay, even if its not a full $5000 each.
Yep as long as you are on a regular monthly payment plan and its part of your expenses. If your loan is deferred you would not be able to claim it as an expense at the time of filing the means test.
Good question to ask your attorney.
But typically:
A. 401k contributions, unless mandatory, are considered disposable income.
B. Repayment of 401k loans is also considered disposable income, ask your atty about the possibility of a two step plan.
C. Repayment of your student loan may be built into your payment plan.