Unsecured Debt If you used your debt consolidation loan to pay off credit card debt, that loan will be treated as an unsecured debt, which means you may be able to discharge it in bankruptcy.
Student Loans If your debt consolidation loan was used to pay off student loans (including private loans) you may not be allowed to discharge that debt in bankruptcy.
For example, the bankruptcy court might decide your actions are in bad faith if you file bankruptcy only a few months after taking out the loan.
If you have a debt consolidation loan you’re struggling to pay and think you may need bankruptcy, talk to a bankruptcy attorney today.
The average student loan debt for 2016 college graduates who borrowed for college, was $37,172 and 70% of the graduates left school owing money.
Private student loans are available, but every expert, even those who work for banks and credit unions, advise students to exhaust all avenues for federal aid first.
In that case, depending on your circumstances, you may be allowed to discharge the loan.
You’ll need to discuss the issue with your bankruptcy attorney.
However, sometimes you are unable to pay off a debt consolidation loan no matter how hard you try, and, because of this, you’re forced to file bankruptcy.
Let’s take a look at how debt consolidation loans are treated in bankruptcy.
The government pays your interest for you while you’re in school.