Some private student loans might be included in bankruptcy

Individuals in Minnesota who are facing educational debt may think that private student loans cannot be discharged in a bankruptcy. However, this is not always the case.

For a student loan to qualify as the type that cannot be discharged in a bankruptcy, the school must meet a number of requirements. The school must be accredited, and this is not the case with many trade schools and flight schools. Furthermore, the school also must have made Title IV federal loans available to students.

In addition, the loans must be for what are known as qualified higher education expenses, and the person receiving the loan must be an eligible student. All of these terms are strictly defined. As a result, individuals should not assume that their student loan debts do not qualify in a bankruptcy.

An attorney may be able to advise as to whether or not certain types of debts including private student loans can be discharged in a Chapter 7 bankruptcy. For some individuals, a bankruptcy may be less disruptive to their lives than continuing to pay off high debts for many years. For example, in some cases, some assets such as a vehicle or a home can be retained. Furthermore, following a bankruptcy, individuals can take small steps to begin rebuilding their credit.

In some cases, an bankruptcy may be a financially responsible choice. An individual may have attended and dropped out of an unaccredited college and be overwhelmed with private loan repayments. They might also face difficulties like job loss or unanticipated medical expenses. A bankruptcy might give such an individual the opportunity to become financially stable by directing money that was going toward debt to an emergency savings account and a retirement account.

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