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Life After Bankruptcy

Student loans can not be settled

In the past, student loans could only be vacated (discharged) in the process of bankruptcy and was dependant on how much time had passed since the payment due date of the student loan, and the date of the bankruptcy filing.

As of May 28, 1991 and before the law passed October 8, 1998, a loan was vacated by the submission of a "general discharge order" if the first payment was to be paid on the student loan no less than 7 years earlier than the bankruptcy was filed. Before amendments that were put forward in 1991, five years was the minimal requirement. If there were any times during this period where you were not required to make a payment for whatever reason (grace periods, delays in debt enforcement, deferments, etc.) this time is legally required to be subtracted from the loan maturation (due date) and the bankruptcy filing date. Outstanding student loan debts that fall within the 7 year window and meeting the above conditions, can be discharged if the court decides to place an express finding that repaying this outstanding student loan would put "undue hardship" on the lendee. All these requirements are applicable to both student borrowers and by parent borrowers or PLUS loans, and will also be applied to any loans taken to pay of prior loans, also known as consolidation loans. The part of law which is charged with dischargeability is governed by 11 U.S.C. 523 (a)(8).

To know if you qualify to have your student loan vacated by a court bankruptcy filing, you will need to provide the following information to your bankruptcy attorney first:

1) Notice of First Meeting of Creditors
2) List of Your Creditors
3) Your Final Discharge order

If you are having problems with other unsecured debts, such as credit cards or medical bills, you can settle those debts and have them reduced. To start the process, call 888-314-1403 to speak with certified credit counselor for free.

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