Why consider bankruptcy if it won’t cover your student loans?

On Behalf of | Apr 25, 2022 | Bankruptcy

If you are worried about how you will ever pay back your student loans, it is crucial to remember there are many others out there in the same position.

The price of property and essentials continues to rise, but the salaries you hoped your education would secure have not kept up. So the first thing to do is to forgive yourself if you feel bad for owing money and accept that the whole educational payment system is flawed.

A recent White House announcement signals the president intends to help out in some way, but as of yet, it is not clear how. There is also a lot of political opposition to such moves from some quarters, which could derail any plans.

Current law allows people to include their student loans in a bankruptcy filing, but the conditions are so strict that few people have ever succeeded. So for all intents and purposes, you may as well forget about clearing your student debt that way. So why file at all then?

You can still clear other debts

If the only debt you had was your student loans, would you be able to pay it? If so, then you have a chance.

By submitting a personal bankruptcy filing, you can seek to clear your other debts. You can free yourself from medical debt, unsecured loans, car loans and outstanding credit card balances. Doing that would mean you can recalculate your finances, take your monthly income, deduct the student loan payments, and use whatever remains to live on.

Sitting around hoping the government will help ease your financial crisis will plunge you further into debt. Finding out more about bankruptcy options puts the control over your financial situation back in your hands.