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Student Loans and Chapter 13 Bankruptcy

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By: Alex Rodin
on 5th May,2013

Student loans, private or federal are non dischargable in bankruptcy.
Student Loans and Chapter 13 Bankruptcy

Student loans, private or federal are non dischargable in bankruptcy.****  However if you are filing bankrutpcy, they must be included. Once you file, your student loan will go into bankrutpcy status, meaning if it is in collections, it will be recalled.  It is basically put into a holding unit...no calls or letters are sent out.  If you choose to make a payment, you must mail it in to a special lock box.  Once the banktupcty is discharged, the loan is updated with all of the interest that accrued during the bankrutpcy period.  In a lot of cases, if you were not in default, your loan will default due to the bankruptcy.  Federal FFELP loans usually end up at ECMC, a federal guarantor that handles the majority of student loans that have been included in bankruptcy.  Direct Loans handles their own bankrutpcies.  Private loans, once the  discharge has been granted will end up in collections.

****There is a provision for student loans to be discharged in bankrutpcy.  It includes a special hearing which is held at additional cost to the borrower.  You would need to meet the requirements of the Brunner Test.  It is very difficult to meet these requirements and is most often denied.

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