Are you facing a lot of student loan debt in Tennessee? Many students are, and you may be looking for a way out. Chapter 7 bankruptcy is a type of bankruptcy also known as liquidation that erases debt after assets are sold. So, can you use this to get rid of your student debt?
On very rare occasions, people have been allowed to eliminate private student loans in this fashion. However, you should note that this is rare, and, for the vast majority of students, this simply won’t be possible.
Chapter 7 bankruptcy is aimed more at other types of debt, such as business loans. The business assets that were bought with the loan are then sold; this money is given to the lender. With student debt, you don’t really have any assets that you purchased, so there is nothing that can be sold.
The way to have the debt discharged, though, is to show that your student loans should qualify as an undue hardship. You must show that you have no way to pay off what you owe currently and that you’re never going to find yourself in a position where you can.
For example, the courts have ruled in this way for people who have been injured and disabled. Because of the disability, these people may not be able to work with the degree as intended, so they’ll never get a career and pay the loan off.
Chapter 7 bankruptcy is very useful if you’re facing overwhelming debt and you have no other options. However, it’s very important to know what types of debt it applies to.
Source: FindLaw, “What Happens After Chapter 7 Bankruptcy?,” accessed May. 26, 2015