College is an easy way for students to build up tons of debt. Besides student loan debt, college students are often offered free credit cards to pay for books, food, rent and supplies. Credit card companies realize that students have many needs and often go into high -paying jobs after college, which may help pay off their debt.
Some college graduates don’t land high-paying jobs the minute they step off college grounds. They may leave college with more debt than they realize and no way to pay it off. So, what options do graduates have to pay for their debt?
Here’s what you should know:
Chapter 7 and 13 bankruptcy have limits
One of the many options people have to wipe away debt is bankruptcy. There are two common types of bankruptcy: Chapter 7 and Chapter 13 bankruptcy.
Chapter 7 bankruptcy focuses on wiping away debt. Although there are some cases where assets are actually sold, most debtors that file Chapter 7 do not lose any assets because they are allowed to exempt (protect and keep) basic assets. This may cause someone’s credit score to take a hit, but can also stops creditors from collecting payments and sending out debt collectors. Most or all of someone’s debt will be wiped out.
Chapter 13 bankruptcy is used to help finance debt. In other words, a repayment program is used to help you save your home or car by paying arrearages over time. There are other uses for Chapter 13 as well.
It should be noted that Chapter 7 and Chapter 13 bankruptcy doesn’t generally discharge Student loan debt, although there are exceptions for Undue Hardship. In addition bankruptcy can impact certain private student loans. Chapter 13 can also be used to hold off on student loan collection during the five year chapter 13 plan. Chapter 7 and Chapter 13 bankruptcy typically focuses on debts such as utilities, rent, credit cards, car payments and medical expenses.
Depending on the loans, government relief programs may be able to clear some of a grad student’s loan debt away. Also, since other forms of debt can accumulate during school, bankruptcy and deal with those other debts which will make it easier to repay student loans..
If you want to know more options to wipe away debt, you may need to reach out for legal help.