Can You Get a Student Loan While in Chapter 13 Bankruptcy?
Yes, you can apply for a student loan while in Chapter 13 bankruptcy. However, obtaining approval may not be easy, depending on the type of loan. An attorney can help you determine your eligibility and apply for the financial support you need to further your education.
Understanding Chapter 13 and Loan Eligibility
Chapter 13 bankruptcy involves setting up a repayment plan to pay off your debt over time. You must stick to this plan, usually for three to five years. During this time, you can’t take on new debts unless your trustee approves. This includes student loans. The trustee must believe that taking out a loan won’t prevent you from making your current payments. Your reason for going to school will also make a difference when the bankruptcy trustee decides to approve the new debt. If it looks like your degree will help you get a better job, the trustee is more likely to support your request to get the loan.
Types of Loans You Can Apply for During Chapter 13
Federal student loans are usually your best bet during Chapter 13. Bankruptcy law says the government can’t deny a federal loan just because you filed. However, if you’ve missed payments on past federal loans, you could get turned down. You also can’t get a new federal student loan if you have any other federal loans that are still in default.
Private student loans are a different story. Non-government lenders often reject applicants with bankruptcies on their records. Even if you have a good plan and have kept up with your payments, many lenders will still say no. You could get better results if you apply with a cosigner or wait until you have completed your bankruptcy case.
Steps to Get a Student Loan While in Chapter 13
If you want to get a student loan while going through a Chapter 13 bankruptcy proceeding, you need to plan ahead. Here’s what you can do to improve your chances of getting your loan approved:
- Consult with a bankruptcy lawyer before taking any action.
- Ask your lawyer to help you request approval from the bankruptcy trustee.
- Write a short statement explaining how your degree will help you earn more money.
- Make sure you are up to date on your Chapter 13 payments before applying for any loan.
- Check your current student loan status and clear up any defaulted loans.
- Apply for federal student aid by filling out the FAFSA.
- Contact your school’s financial aid office to discuss your situation.
- If you apply for a private loan, look for a cosigner with strong credit.
- Consider starting with a low-cost school to demonstrate your ability to handle the student loan payments.
Alternatives to Taking a Loan While in Bankruptcy
If you can’t get a student loan during bankruptcy, you could consider other ways to pay for school. Start by applying for scholarships and grants. Funds from these sources don’t need to be repaid and aren’t tied to your credit. Some schools also offer payment plans that split tuition costs into monthly amounts. If you’re working, consider asking your employer about tuition assistance. Waiting until your Chapter 13 case is resolved can also make it easier to get a loan in the future.
Contact Our Ohio Bankruptcy Attorneys to Learn More
If you have questions about getting a student loan during Chapter 13, or if you’re struggling with student loan debt and need help, reach out to the bankruptcy attorneys at Amourgis & Associates, Attorneys at Law. We offer a free initial consultation and can help you understand your options.
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At Amourgis & Associates, Attorneys at Law, we only represent consumers. We fight for regular people who have been seriously hurt in accidents. We fight for people who are being crushed by overwhelming debt and need a fresh start. We fight for individuals and families. Never businesses. Never insurance companies. We are loyal to the consumer.
