student loans after bankruptcy

Can filing for bankruptcy interfere with your ability to get a student loan later on?  It depends, really.

Filing for bankruptcy often doesn’t impact your responsibility to repay student loans you owed before the case was filed.  There are exceptions, but they’re just that – exceptions and not the rule itself.

So let’s start with the assumption that your student loan did not get wiped out in your Chapter 7 or Chapter 13 case.

If you apply for a federal student loan, the government doesn’t ask for a credit check.  Why?  Because the government knows that no matter how bad your credit may be, you’re going to be on the hook for payment of your student loans for (potentially) your entire life.  Getting a federal student loan should be no problem for you.

For a private school loan, the answer is different.  Private loans are made to people based on credit history, so the potential lender is going to look to ensure that your credit is good.  If you’re just coming out of bankruptcy and have a bad credit score, chances are that your application will have some difficulty getting through.  In this case, it’s best to wait for a year or two and build up some good credit after the case is completed.

For parents who are getting student loans for their children, the response is the same as with any other loan.  The lender is going to look at your credit, and if it’s bad then you’re not getting the loan.  Once again, wait for a year or two and build up some good credit post-bankruptcy.

So if you’re looking at filing bankruptcy, you need to consider whether you’re going to need to apply for a student loan later on – and if so, what kind and when.

Filing under Chapter 7 or Chapter 13 may knock your credit score for a little while, but if you’re smart and proactive then your score should be pretty good about two years post-discharge.  So a private loan in four years may not be too difficult.  Nor, for that matter, will a federal student loan be tough to muster.

Regardless, you need to ask yourself one critical question: without filing for bankruptcy, where will you be in two years?  Would your credit be good enough to get a private loan anyway?  By being honest with yourself, you can make a careful assessment of what you need to do.

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