Student loan lenders have long reach, even beyond bankruptcy
When it comes to bankruptcy and its ability to provide a person a path to financial security, the issue of student loans tends to stand apart. Unlike other unsecured debt, student loans aren’t typically discharged through a Chapter 7 bankruptcy.
Chapter 13 bankruptcy might provide the structure within which student loans can be repaid, but whether or not such a strategy is the right one to pursue is something that differs case to case. That’s why it’s best to explore all options in consultation with an experienced legal adviser.
To get a sense of just how complicated it can be to deal with student loans, we turn to a recent item appearing on Fox Business courtesy of Bankrate.com.
A woman wrote to ask whether debt collectors could come after her daughter for student loans that her ex-husband claimed had been erased after he filed for bankruptcy. The response from the adviser was telling.
It started with the observation that a clear answer couldn’t be provided because the devil is in the details of the case and he didn’t have the answers to two key questions: Did the daughter sign for the loan in question? Did the husband really discharge the debt or does he just think he did?
If the answer to the first question is no, then the adviser says it’s possible that the daughter would be protected from any collection threat. The answer to the second question is the one that is perhaps more important to get answered.
The adviser notes that eliminating student loan debt doesn’t happen with the standard bankruptcy filing. There are eligibility standards to be met that few do and specific steps to take in filing that often aren’t. The result often is that the loan comes back to haunt when you think it has been dealt with.
The critical thing to take away from this is that where student loans are concerned, the reach of lenders can be long and persistent.
Source: Fox Business, “Does Dad’s Bankruptcy Erase Student Loan Debt?” Justin Harelik, Bankrate.com, April 30, 2014