Student Loans And Bankruptcy
Many of my clients are people who are working on their college degree or are parents of college students. They are concerned about how bankruptcy will affect their ability to get any student loans after they file bankruptcy.
As you may know from your research, student loans are generally not dischargeable in bankruptcy. Meaning that you usually can’t rid of them.
The flip side of that is that Section 525(c)(1) of the Bankruptcy Code prohibits a lender of federally guaranteed student loans from denying a loan because someone has filed bankruptcy. Section 525(c)(1) states that a
governmental unit that operates a student grant or loan program and a person engaged in a business that includes the making of loans guaranteed or insured under a student loan program may not deny a student grant, loan, loan guarantee, or loan insurance to a person that is or has been a debtor under this title or a bankrupt or debtor under the Bankruptcy Act, or another person with whom the debtor or bankrupt has been associated, because the debtor or bankrupt is or has been a debtor under this title or a bankrupt or debtor under the Bankruptcy Act, has been insolvent before the commencement of a case under this title or during the pendency of the case but before the debtor is granted or denied a discharge, or has not paid a debt that is dischargeable in the case under this title or that was discharged under the Bankruptcy Act.
This is good news for anyone considering bankruptcy and is worried about how it will affect their education. Bankruptcy is designed to provide a fresh start, not wreck your financial future. By allowing you to qualify for student loans for higher education, bankruptcy could be the first step you need to get on the road to financial recovery.
Come In To Learn How Bankruptcy Will Affect Your Student Loans
If you have questions about whether you can continue to get student loans if you file bankruptcy, or if your student loans can be discharged, we hope you’ll come in for a free consultation with an experienced bankruptcy lawyer. You can set up an appointment by calling 303.331.3403 or by using our online scheduling system.
