If you are a student, circumstances are not always guaranteed to remain the same and sometimes it takes a seemingly simple decision beyond your control to change things. This is why it is important to understand the consequences that may arise from your ongoing student loan should any of your income conditions change from favorable to the opposite. Before you start thinking of the different types of private bankruptcy loans that you can apply for, it is essential to understand what other types of options are readily accessible for anyone unable to make a repayment on their federal student loan.
While you may be hoping to receive an email informing you of how your loan has been discharged, it is equally important to take the initiative to ensure that your college administration knows your unfavorable financial circumstances. If you have been declared bankrupt by a court of law then you can file an adversary proceeding action to inform the court that making payments on the loan would intensify the financial crisis as a result worsen your ability to meet any of the expected payment obligations. However, an adversary proceeding does not guarantee that your student loan will be discharged in full. Sometimes some terms form part of the court’s bankruptcy determination such as how your loan can be discharged partially offset by a portion of the repayment or lowered interest.
Before you contemplate taking another loan to repay your initial student loan and further deteriorating your credit score, you can opt for various readily available repayment plans or speak to your loan servicer and negotiate a lower interest on your loan. Knowing what to do in case options are limited will help prevent more debt from being incurred and could help you in your bankruptcy claim.