As opposed to more than a few other unsecured debts, student loans can no more be crossed off in a bankruptcy court. Lenders of student loans have won a 1998 change in the federal law. As a result this has made it almost impossible to discharge their loans. The courts have cast off almost every single dispute that even the poorest of borrowers have made. Their arguments had posed that repayment would amount to an unwarranted hardship but bankruptcy attorneys now know that the courts have turned a deaf ear to such claims. Only those borrowers who are completely and permanently disabled have some hope of having their debt discharged.
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Certain bankruptcy court judges who grant a discharge tend to reverse their verdict on appeal. The bankruptcy courts now hold that you cannot erase a student loan simply by showing that you are bankrupt and in no position to pay. You must also be able to prove that your financial outlook is such that it is impossible to make the payments even in the future.
In the event that you are having considerable trouble in making ends meet and are considering filing for bankruptcy as an option then you may well wish to consolidate your student loan debts. Consolidation can most often lower your monthly payments substantially. This will in turn help you to free up an increased amount of your money and can also help you to gain a better control of your finances.
If you are contemplating filing for bankruptcy then you must obviously be experiencing extreme financial difficulty. This being the case you may well be worried that you cannot be eligible for a federal loan consolidation. However, the good news is that there are in fact no credit checks, no fees and also no income verifications for this. As long as you have a minimum amount of $7,500 in outstanding federal education debt, you do qualify for a federal consolidation. The only other requirement would be that you should be in good standing with your loan lenders. It is however, important that you take quick action as if you default on your federal loans then you will unable to consolidate your loan debts. This can now give you some important perspective on bankruptcy and student loan debts.
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