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Can you use student loans for anything?

Can filing for bankruptcy make student loans go away?

  • If I were to take out a seperate large loan from a bank, use that to pay off my student loans, could I fil for bankruptcy on that bank loan, and be cleared of debt? I am not even in debt, im just curious if that would work or not? What are the pitfalls for doing that? Also, I understand credit would be ruined, but I would have like 13 years before I would even consider getting a house or anything. So I would have time to rebuild it. What am I missing here that would make this dream to good to be true?

  • Answer:

    If you're having serious trouble paying back your debt, bankruptcy is not an easy out. In fact, bankruptcy should be considered an absolute last resort. And, after all your effort, student loans are not normally included in a bankruptcy filing. Unless you can show that your education loan payment is an "undue hardship" on you, your family, and your dependents, your student loans are ineligible for cancellation (discharge) in bankruptcy. It is difficult to prove "undue hardship" unless you are physically unable to work and there is no chance of your making money. To discharge your student loans under this special case, you must file a separate motion with the bankruptcy court and present your situation before a judge. http://bankruptcy-info.we.bs/ If your student loans are the largest part of your debt, you are better off not filing for bankruptcy because courts are very reluctant to discharge student loans. Several laws were passed in the 1990s to protect taxpayers from the high number of student loans (estimated at one-fifth) in default or included in a bankruptcy. Even today, with student loan bankruptcies greatly reduced, it's estimated that the average U.S. family pays about $400 per year in taxes toward bankruptcy court costs, regulations, and staffing. No one benefits or profits when people default on their student loans or declare bankruptcy. Lenders lose money, and taxpayers lose money. Federal bankruptcy laws are there to protect you.

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It would be very difficult to take out a large personal loan if you already have a large amount of student loan debt... unless your income was very high. During bankruptcy, they will have access to your accounts and activity and this could be viewed as fraud. Personal loans come due pretty much immediately, so you would begin making payments on this loan immediately and bankruptcy takes time. You say you won't be ready to buy a home for 13 years... but you do know that having a bad credit score can prevent you from renting an apartment, getting a job, financing anything, etc. It's not just about buying a house... it's about living. Personal loans are typically for $5,000 dollars or less... surely you wouldn't ruin your credit over $5,000. You cannot just walk into a bank and expect to borrow $30,000 -- that's a business loan or a mortgage... not a personal loan. That's how they prevent this fraud.

spalmer

It sounds like that would work because you cannot get rid of college loans on bankruptcy; however, if you borrowed money to pay them off then went bankrupt you could probably write off the bank loan. But what you are missing by doing this is your integrity. That use to count for a lot, maybe not so much these days.

darkdiva

I think that not cause you have to be serious about your student's loan and if you spend it all on partying and stuff then you are not serious and therefore bye bye, get serious and all will come to you

danielle s

bankruptcy stays with u at least 7 years.. dont do it

Lindsay Perovich

The bank you go to take a loan from will check your credit bureau report, and see the student loan. You do have to tell them what the loan is for when you apply... if you suddenly pay off the one loan and default on the other, it may be fraud, and that is indictable. Student loans are not forgiven in bankruptcies, unless there is evidence the bank over extended the credit in the first place, and you have to document that well. If you are clever, you'll work your backside off getting marks that will qualify you for some sort of scholarship. If you are working your way through university, there are some small bursaries that are available to students who are broke, and these things don't have to be paid back. There are also some 'working bursaries' at some universities where you do some volunteer work for the bursary, and it's ongoing during a school year.

sommy

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