As a general rule, student loans are excepted from a bankruptcy discharge, meaning a borrower remains obligated to pay the student loans after successful completion of a bankruptcy. However, as with any rule, there are exceptions. Student loans can be discharged in bankruptcy if the bankruptcy debtor can prove that the student loan obligation imposes an undue hardship on the debtor and the debtor’s dependents.
If you buy a car with little or no money down, there’s a good chance your loan is upside-down, meaning you owe more than the car is worth, as soon as you drive off the lot. These little or no money down loans are often coupled with high interest rates. It’s not a good position to be in if you have trouble making the payments and want to sell the car. The good news is that Chapter 13 bankruptcy can help right this situation.
This is a frequent question we hear from our bankruptcy clients. Many imagine that bankruptcy will leave a black mark on their credit reports resulting in a lifetime of denied credit and high interest. As bankruptcy attorneys, we have seen clients rebound from bankruptcy quickly, but we now have data to reassure clients that those rebounds are not a rare occurrence.