According to American Student Assistance, around 60 percent of all students attending college or pursuing higher education borrow money to pay for tuition. As of 2012, the average student loan balance among all age groups was $24,301, with around a quarter of borrowers owing more than $28,000. These high student loan balances are a major burden on college graduates, especially those who cannot find a job in their field or who are only able to find a low paying job.
Those struggling with student loans and unable to make their payments may find themselves facing aggressive collection actions. Not only can lenders use debt collectors and pursue normal methods of collecting the debt, such as contacting you regularly and taking legal action for default, but student loan debtors also have special legal protections that make it even easier for them to try to get loans repaid. Student lenders, for example, may be able to seize tax refunds and apply the money to student loans.
Those who are facing collections activities and who cannot pay their student loans likely wonder whether bankruptcy is the answer. Unfortunately, due to student loan dischargeability rules, Chapter 7 bankruptcy will not discharge student loans. However, Chapter 13 may help you free up the cash you need to make a living wage. Image may be NSFW.
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Rules of Student Loan Dischargeability in Virginia
When you file for bankruptcy, many different kinds of debts can be discharged, which means the debts are forgiven and no longer able to be collected. Credit card debts, personal loan debts and even medical debts and some kinds of tax debt can be discharged. While Chapter 7 and Chapter 13 bankruptcy involve different processes leading up to the discharge of debt, the ultimate goal of both types of bankruptcies is still to wipe the slate clean on debt that is owed.
There are other kinds of debts, however, that cannot be discharged. These debts will remain even after a bankruptcy filing and the debtor will need to continue to pay them or face ongoing collections. Student loan debt falls into this category. Student loan debt is almost never dischargeable in Chapter 7. While there is a very limited exception for when repayment would cause undue hardship, this is usually only an option if something terrible has happened such as becoming permanently disabled and completely unable to work.
Outside of extreme situations, there are essentially no way to discharge student loans in Virginia through a Chapter 7 bankruptcy. Failure to find a job, lack of earning potential, or even the fact that you did not finish your degree are not going to be relevant factors in assessing whether repaying your loans is an undue burden. Whether you currently have the ability to actually pay the debts back or not, you’ll usually still be stuck with the debt and will not able to eliminate it. We here at Lee Legal don’t think this is fair.
This doesn’t mean bankruptcy can’t help, since your student loan payments may become more affordable if you can resolve your other debt issues. Still, before filing, you should speak with an experienced bankruptcy lawyer and make sure it makes sense for you to declare bankruptcy if your goal is to deal with student debt.
Related posts:
- Student Loans and Bankruptcy in Washington: Does Bankruptcy Get Rid of Student Loans?
- Can Student Loans in Washington DC Be Discharged Through Bankruptcy?
- U.S. Student Loan Debt is Second Only to Mortgages
- Chapter 7 Car Loan in Virginia: Can I Keep My Car If I File Bankruptcy?
- Elizabeth Warren: The U.S. is Taxing Young People with Student Loans
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