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Student loans are typically much more difficult to discharge in bankruptcy than other types of debts, such as medical bills or credit card balances. However, many people struggling with student debt are still able to find relief through bankruptcy by eliminating other debts, thereby making their educational loan payments more manageable.In addition, while student debts are rarely eligible for discharge during Chapter 7 “liquidation” bankruptcy, educational loans are treated similarly to other debts during Chapter 13 bankruptcy, which is also known as debt reorganization.
During Chapter 13 bankruptcy, a person’s debts are restructured and a payment plan is created that allows the borrower to pay off the highest priority debts over a period of a few years. For some people struggling with student loans and other debts, reorganization offers a way to catch up on missed payments and get back on track, while also protecting against foreclosure and other collection actions.
While both private and government student loans are protected from elimination in Chapter 7 bankruptcy proceedings, Chapter 11 and Chapter 13 bankruptcy allows for the restructuring and consolidation of student loan debt into affordable monthly arrangements.
Student loan collectors have the benefit of government backing and often use this immunity to abusively collect unmanageable student loan debt. Repayment obligations can be overwhelming, and student loan collectors are renowned for extreme collection techniques that even include threats to licensing and other professional standing that students have worked so hard throughout school to attain. You do have rights regardless of what type of loan the collectors are calling you about.
Learn more about Your rights on Collector Harassment regardless of the type of loan