The Golden Rule of Student Loans

I would say 1/2 of my bankruptcy clients who file for bankruptcy protection have a student loan in default. When I went to law school,I took out $100,000 in financial aid and in April of 2011, paid it all back. Yes, more than 20 years of payments. Student Loans or educational loans are non-dischargable in bankruptcy. That means you are going to have to pay them back sooner or later regardless of filing for bankruptcy protection. The good news is that I have found the “public” student loans servicer’s much more willing to work with you than the “private” ones. When I had my loans, I took advantage of options like “forbearance” – delaying my payments for 6 months when times got tough. Or even “restructuring” the debt to make graduated payments over time. Trust me, you won’t get such an offer from your mortgage company or credit card company. So in that sense, at least it is not as overbearing as it could be. There is a way to get your student loan debt discharged in a bankruptcy but only for “undue hardship” – not “hardship” – but “undue” – and judges are reluctant to grant such a request. Now that the economy is still in the tank – many people are going back to school and that school debt is about to become due. So the “golden rule” is don’t expect a free pass on that student loan debt – it won’t go away.

School Loans Op-ed Piece

School Loans Bankruptcy

Bennett Cunningham is a Bankruptcy Attorney licensed in Texas and is a former Investigative Reporter for the CBS Television Station in Dallas. Mr. Cunningham has garnered 7 Regional Emmy Awards, including the Best Investigative Reporter in Texas 2 years in a row, as well as several National Awards for his exposés into the mismanagement of taxpayer dollars and government waste.

This blog is not meant to give you legal advice. If you need to seek legal advice, you should consult a licensed attorney in your jurisdiction.

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