Although it is an unfortunate fact that even those who have pursued the course of further education find themselves under a debt load they cannot bear, the options can seem severely limited for those students who wish to reduce their college financial debt. One of the less popular means of student loan debt reduction, Chapter 13 bankruptcy, is like a double-edged sword. It may provide relief to your debt problems but not without doing some damage to your credit rating for the long term.
Still, if you wish to get some relief from aggressive creditors and immediately deal with your student loan debt reduction, Chapter 13 is your best bet. Of course, this is provided that you are able to meet the legal requirements that allow you to file for bankruptcy. Under the provisions of this form of bankruptcy, you will have the option of using a court trustee available to supervise your loan payments and getting your schedule arranged in a way that corresponds best with your monthly income.
Specific guidelines in bankruptcy law also allow for the discharge of the loan agreement if it can be proven that the repayment of the loan amount creates unnecessary hardship for the student in question or the student’s family. There is also the possibility that court proceeding regarding any bankruptcy related to student loan debt may include rulings that allow for a portion of the debt to be eliminated and only a percentage of the total loan amount to be repaid. Despite the negative reputation of this method of student loan debt reduction, Chapter 13 is still a viable option to help alleviate your debt problems.
Most former students who are trying to manage the burden of student loan debt will not completely clear the debt. Rather, with the removal of other obligations, you will be better able to meet monthly student loan payments. As far as regulating the means of student loan debt reduction, Chapter 13 bankruptcy allows the court trustee to establish a set amount for the debtor to pay every month via the court system in order to meet their obligations based upon pre-arranged debt elimination plans such as four or five-year plans.
In order to make sure that filing bankruptcy on your student loan is the best option, you should take the time to consult either the lender or a school administrator who is in charge of student loan accounts. They will be able to answer the crucial question: Is declaring bankruptcy a viable means of student loan debt reduction, Chapter 13 or otherwise?