If you’ve been taking out money for books or living expenses during college, then you may be in a position where you’re finding it hard to pay back what you owe. Most people work part-time when in school, and there’s no doubt that living expenses, especially on campus, are high.
If you’re considering seeking bankruptcy protection, there are a few things you should know. First, it’s unlikely that you’ll be able to get your student loans discharged without showing significant financial and personal hardships. Second, if you’re still adding debt to your credit cards, the court may not agree to dismiss all of those debts.
Will you lose access to financial aid in college if you go into bankruptcy?
If you decide to pursue bankruptcy due to debts you have other than school-related debts, then you should know that your bankruptcy could impact your right to financial aid. While you may still be able to get some financial aid through government-backed student grants and loans, you may lose access to the Federal PLUS loans. In addition, you’re forbidden from taking on new debts while your bankruptcy is pending.
A better idea may be to wait until you complete your college program to file for bankruptcy. Your attorney may be able to help you with settlement offers or renegotiating your debts, so you can try to make it through school before filing. Sometimes, alternatives to bankruptcy used effectively could reduce the need for bankruptcy altogether. That’s something to discuss with your attorney as you look at what you want to do next.