There is no denying that higher education doesn't come cheaply. With the nation's top private colleges costing upwards of $40,000 for tuition and fees alone (and many public universities not far behind), it is obvious that more students than ever before are turning to student loans to fund the cost of their education.
However, student loan debt and a stagnant economy have created a perfect storm of financial chaos - and if you want to learn how to file for bankruptcy with student loans, then this article is a must-read.
First, it's important to note that under federal bankruptcy laws enacted in 2005, discharging student loans through bankruptcy is near impossible. This is certainly not good news to the average graduate, who has approximately $19,000 in loan debt and earning only paltry entry-level wages.
But there are ways to file for bankruptcy with student loans - and you have to be extremely careful while you do so. If you think you have a shot at discharging your student debts through bankruptcy, here's what you need to know:
1. You need to show the bankruptcy courts that unless your loans are discharged through bankruptcy, you won't be able to live a normal standard of life. Now, keep in mind that a "normal" standard of life varies between individuals and the federal government. Ultimately, you'll need to show through your finances that unless your student loans are dismissed, you'll be homeless, in perpetual poverty, or both.
2. You should also show the bankruptcy courts that you've faithfully made every attempt to make your payments. Some individuals are successful when they are able to prove that they've gone above and beyond to keep their loans from defaulting. Additionally, if you can show that you had to take out the loans to earn a certain education (say, a law or medical degree) and the economy is preventing you from finding a job that reflects the amount of money you invested in your education, you may be successful.
3. Finally, keep in mind that bankruptcy courts may consider the financial earnings of anyone in your household to stop you from discharging your student loan debts. For example, one woman was not allowed to discharge her student debt because her live-in boyfriend made too much money.
Use these tips to see if you qualify for personal bankruptcy to discharge student loans or if a bankruptcy can wipe out other debt such as credit card or medical debt that can free up income to keep your student loans from defaulting.