Filing for bankruptcy can be a daunting process. But if you’re struggling to keep up with your student loan payments, it may be an option worth exploring.
Will it end collection efforts or prevent the loss of assets? Will filing bankruptcy stop student loan garnishment? Is it really the best option for you?
Here are four things to know about bankruptcy and your student loans:
Student loans are considered “non-dischargeable” debts in most cases, but there is an exception for those who can prove they are facing “undue hardship.”
To qualify for undue hardship, you must show that making loan payments will cause you “irreparable harm.”
For example, your student loans are causing undue hardship if they prevent you from meeting basic living expenses or from maintaining a minimal standard of living.
In some cases, bankruptcy won’t eliminate your student loan debt. You’ll still owe what you owe after you file. However, filing could still help you. By eliminating other types of debt, more money will be available to pay your student loans.
If you’re behind on your student loan payments, filing for bankruptcy can stop collection efforts by the lender or debt collector. This may give you some time to get back on track financially.
Will filing bankruptcy stop student loan garnishment?
Maybe.
When you file, something known as an automatic stay goes into effect. The automatic stay stops, at least temporarily, all collection efforts. This means you’ll get at least a temporary reprieve from paying your bills while your bankruptcy case is sorted out.
Filing for bankruptcy is considered a “black mark” on your credit history. It can cause your credit score to plummet. This may make it difficult to borrow money in the future or to rent an apartment.
But it’s important to consider your current financial situation and how it’s affecting your credit score. Chances are it is being damaged even without filing.
In many cases, filing for bankruptcy will allow your score to improve faster than allowing your financial problems to build.
If you’re struggling to keep up with your student loan payments, there are other options available besides bankruptcy. You may be able to apply for a deferment or forbearance, which allows you to temporarily suspend or reduce your payments. You can also try to negotiate a payment plan with your lender or debt collector.
Bankruptcy is not the right choice for everyone, but it’s important to know your options if you’re struggling to pay back your student loans.
If you’re feeling overwhelmed by your student loan payments, don’t panic – there are other options available. You may be able to apply for a deferment or forbearance, which will allow you to temporarily suspend or reduce your payments. You can also try to negotiate a payment plan with your lender or debt collector.
Will filing bankruptcy stop student loan garnishment? Maybe.
We would be happy to answer any of your questions and help you get started on the path to financial freedom.
Contact the Law Offices of Robert M. Geller at 813-254-5696 to schedule a free consultation.
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