Student loans can amount to tens or even hundreds of thousands of dollars in personal debt, which you may have started accruing when you were barely 18. Investing that much money in higher education does not guarantee that a student will later find appropriately gainful income, regardless of what institutions they attend and what grades they achieve.
Many professionals who are theoretically successful find themselves still struggling with their student loans years after they graduate from college or graduate school. Most people will not qualify for the discharge of their student loans in bankruptcy, but personal bankruptcy can still help those dealing with student loan debt. Chapter 13 bankruptcy, in particular, can be useful for those with major student loan debts.
Chapter 13 bankruptcy helps you renegotiate loans
One of the biggest benefits of a Chapter 13 bankruptcy is how it pushes your lenders to cooperate with you. You have to commit to a repayment plan for several years that will use almost all of your disposable income, which will likely affect your student loan repayment.
You can potentially adjust your debts while working toward your discharge. You are in a stronger position to request changes to your student loan terms, like reduced payments or an extension of your repayment time. While not every lender will cooperate with you, having a bankruptcy in process can be a powerful motivator.
Bankruptcy can also help you stop aggressive collection activity on other debts that could affect your ability to keep making payments on your accounts, like the repossession of a vehicle that might, in turn, cost you your job. Learning more about how bankruptcy affects student loan debt will assist those struggling to make their student loan payments every month.