Thursday, January 13, 2011

Student Loans and Bankruptcy

Chapter 13 Bankruptcy restructures your debt in order to make financial obligations to creditors manageable. Debts commonly included in Chapter 13 bankruptcy cases are past due mortgage payments, car loans and student loans. Nothing absolves you from having to pay back your student loans, but Chapter 13 helps you get a handle on the payments.

A Chapter 13 bankruptcy may also erase up to 100% of your unsecured debt; credit cards, medical bills, store cards and personal loans.

At present, Americans owe $829 billion in student loans. If a student falls behind in their student loan payments, the Department of Education is legally allowed to implement the following collection methods:

• Wage garnishment without a court order

• Suspension of state professional license

• Garnishment of social security/disability income

• Withholding IRS tax refunds

Chapter 13 bankruptcy stops all of these harsh collection methods and allows a student a little breathing room to pay what they can out of their budget. Many Chapter 13 cases are spread out over 5 years allowing a student plenty of time to discover new career opportunities and live comfortably without suffering from constant threats and harassment by SallieMae.

The following graphic illustrates the student loan racket:

To speak directly, one on one, with an experienced and knowledgeable Philadelphia Bankruptcy Lawyer, please contact the Dunne Law Offices at (215) 854-6342. We offer a free initial consultation for all consumer bankruptcy matters.

The Dunne Law Offices, P.C. is a debt relief agency. The Dunne Law Offices, P.C. helps people file for bankruptcy relief under the bankruptcy code.