Are you current on your student loan payments, but are just having difficulty making them because of your credit card debt obligations? Are you looking at filing bankruptcy to wipe out that credit card debt to clear your decks financially for those student loan payments? If so, you need to be careful.

Private Loans

If you have private student loans, read the loan notes carefully before you file. Examine thoroughly the definition of the term “Default.”  Does the definition include the filing of bankruptcy?  If so, filing can put you in default even if you are current on your payments!  This can cause problems not only for you, but your cosigner as well.

Federal Loans

Federal loans do not have default clauses that include bankruptcy, but the cessation of automatic payments can still be an issue.  All creditors are subject to the automatic stay, including the government, so you need to be awareå of this,so as not to get behind.

If you file a chapter 13, this can cause some other complications.  Student loan debt is no different than credit card debt, and the bankruptcy trustee may well require that you pay it the same as you would any other debt: through your plan.  Learn more!

Steven J. Richardson
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Bankruptcy, Collections, Student Loan, DUI and Traffic Court attorney in Woodbury, NJ.