When you file for Chapter 7 bankruptcy, you will be able to discharge most of your debts. There are a few, though, that cannot be erased through bankruptcy. For example, in most cases, you will still be responsible for student loan debt. If you owe a large amount of money in student loans, this can prove to be a challenge.
There are still several options you can take advantage of to manage your student loan debt.
1. If you find yourself unable to make your payments, you may be able to apply for a forebearance. This postpones your payments for a specified period of time, usually between six and twelve months. Keep in mind, though, that interest will still accrue while your loans are in forebearance, so your payments will end up being a bit higher after the forebearance period has ended.
2. If you are unemployed, you may also be able to obtain a hardship deferment. This frees you from making payments for a short period (usually six months), but your lender may require that you submit proof that you are actively seeking work.
3. A student loan consolidation is another option that can help you effectively manage your student loan debt. Consolidations are credit based, so you may have to wait a year or two after your bankruptcy discharge to take advantage of this option. If you can get a consolidation loan, though, all of your student loans will be lumped together, and you will only have one payment each month. More importantly, you can use a loan consolidation to extend the term of your loan to thirty years, instead of ten. Although you will pay significantly more in interest, this will serve to reduce your monthly payments.
Even though you typically can't discharge your student loans through bankruptcy, you can use these techniques to manage your student loan debts so you can get back on the path to financial stability.
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