Bankruptcy in the state of Pennsylvania is a process in which debts that are unable to be paid are restructured or eliminated altogether. While this may seem like an attractive option to some that are overwhelmed with student loan debts, filing for bankruptcy can cause a person’s credit score to take a major hit for many years, causing them trouble in future financial endeavors. There are several different levels of bankruptcy that a person can claim, and different levels may suit different levels of need.
While it is difficult to file for bankruptcy for student loans in the state of Pennsylvania, it is not impossible, and to do so one must prove to the courts that the paying of these student loans will pose a significant amount of financial stress to a person or their direct dependents.
Student Loans And Types Of Personal Bankruptcy
In order to eliminate or reorganize student loan debts in the state of Pennsylvania, one must file for a chapter of personal bankruptcy. These chapters are made for individuals who wish to either eliminate their debt through the liquidation of assets, or form structured payment plans that will allow them to repay their creditors over time. Two of the most commonly used chapters of personal bankruptcy used to help with student loan debts are chapter 7 and a chapter 13, with both having their own advantages.
Filing for chapter 7 bankruptcy means eliminating debts entirely through the liquidation of certain assets, meaning that a person can use the sale of their assets to pay back creditors in order to lessen their financial load, but this chapter of bankruptcy often does not include the debts incurred with student loans specifically. However, if a debtor has other outstanding debts that cause them to fall behind on their student loan payments, they can have those debts eliminated in order to better pay back their student loans, thereby improving their current financial situation.
Student loans may be eligible to be discharged, or eliminated, in Pennsylvania under only one condition. If a person can prove that the repayment of these student loans specifically will cause an excessive amount of hardship on them or their dependents, he or she may be able to have these debts eliminated when filing for chapter 7 bankruptcy. Student loan debt elimination is typically most successful when the debtor has a particularly skilled bankruptcy attorney, or they are of an exceptionally low income status.
Chapter 13 bankruptcy is most often used when going bankrupt with student loan debts in the state of Pennsylvania. What chapter 13 bankruptcy does is allows a debtor to reorganize their debts and set up a payment plan that will better help them to catch up on outstanding amounts due. Chapter 13 bankruptcy will also allow a debtor to keep all of their assets, allowing them to keep their possessions while filing for their repayment plan through a Pennsylvania bankruptcy court. If the filing of a person’s chapter 13 payment plan is accepted by bankruptcy courts, they can begin paying their consolidated debt payments without needing to worry about the loss of their possessions or assets. These payment plans will typically last around 5 years, allowing a person ample time to get back on the correct financial track.
Increased Student Loan Debt And Federal Relief
With the increased price of furthering one’s education, and the need for a higher degree to achieve a worthwhile career, it is no surprise that student loan debt is now the largest consumer debt facing American people today. Current and former students of all ages are falling behind on their student loan payments, as interest rates are rising and careers are becoming more difficult to find. Because of this, federal and private student loan debts are causing a hindrance on society, and many politicians in government are striving to find a way to relieve some of these debts for those struggling to make payments on their education.
Find The Correct Lawyer To Aid In Bankruptcy With Student Loans
For Pennsylvania residents of the Montgomery County areas of Norristown, King of Prussia, or Plymouth Meeting, it is always important that the help of a skilled attorney is sought before choosing bankruptcy due to overwhelming student loans. Bankruptcy of all chapters, and for all reasons, can be highly complicated, and the laws and stipulations revolving around each chapter of personal bankruptcy are best understood by a professional in the field of law. By hiring a skilled local attorney, a debtor can have their best chance at a successful bankruptcy filing and experience, allowing them to finally pay down the debts accumulated through these expensive loans.
Also, a high quality bankruptcy attorney in the area can help a debtor to understand which chapter of bankruptcy is right for them, or if the option of bankruptcy is the best choice for their situation. Bankruptcy lawyers of the area are well trained in all aspects of different types of bankruptcy, and they will be able to effectively assess each personal situation in a way that will allow their clients their best chance at a successful experience. By hiring a bankruptcy lawyer, a person can consolidate or eliminate their debt as their individual situation calls for it, and be well on their way to getting back on track financially without difficult to pay outstanding student loan payments.