Student Loans After Bankruptcy
Bankruptcy has become very prevalent these days given the economic mess we are coming out of. So, can you get student loans after bankruptcy?
Bankruptcy is the great white wash of finances. It used to be easy to file for Chapter 7 bankruptcy and liquidate your debts. These days, it is pretty difficult to file Chapter 7. The law is tilted more towards forcing you to repay your debts, but on much easier terms than the original loans.
Bankruptcy should be taken seriously, but not excessively so. You aren’t going to jail. Life isn’t ending. Yes, your credit is going to take a beating, but that is it. You are not. I filed Chapter 7 in 1999 after incurring a boatload of debt as an idiot. Today, I have stellar credit and a great credit score. In short, you can survive and it is not the end of the world by a long shot.
Can you get student loans after bankruptcy? Yes. The relationship between student loans and bankruptcy is unique. Why? Well, you can’t discharge student loans in a bankruptcy case. As a result, the lender isn’t risking much by giving you a loan. In fact, there is even less risk since you’ve got your financial house in order. At least this is the way it should work.
We are coming out of one of the ugliest economic periods in our history. The “Great Recession” or “Little Depression” has been a huge slap in the face for everyone from homeowners to the biggest banks. For their part, banks are hyper sensitive to risk these days. Giving student loans to people who have already filed bankruptcy looks pretty risky. The practical effect of this is many banks simply are not lending.
The key to getting student loans after bankruptcy is to shop around. Many banks will not be giving the loans, but some will. The key is to locate those that are. Obviously.
