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Will bankruptcy erase a student
loan?
Dear Dollar Diva,
What are the current bankruptcy laws pertaining to defaulted student
loans that are more than 10 years old where no payment has ever
been made?
-- Peter
If it is 10 years from the first payment due date
and you've made at least five years of payments, you have a better
chance of including your student loan in a bankruptcy filing. Chances
are, if you have not made any payments 10 years from the first payment
due date, you will not be able to include it in bankruptcy filing.
That's according to Sallie Mae, a government-chartered
corporation that backs about 40 percent of all insured student loans.
Sallie Mae purchases loans from lenders, so they can replenish their
funds and make more loans.
But remember, filing for bankruptcy is a last resort.
It should be done only when you truly have no other way to deal
with your debts.
See the Dollar Diva's Sept. 23 column, "Dodging
the collectors," for more information on bankruptcy and credit
counseling services.
You may also want to check out these stories from
Bankrate.com:
The
last debt resort -- bankruptcy
Filing for bankruptcy is the last resort to your financial woes,
not a choice. If you are in debt and need to file, there are pitfalls
you can avoid.
Is
bankruptcy the stairway to heaven?
Will
Chapter 7 put us on the road to ruin?
Dodging
the collectors?
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-- Posted: Feb. 17, 2000
DOROTHY ROSEN has a master's degree in finance, with a specialization in accounting,
from the Kellogg Graduate School at Northwestern University in Evanston,
Ill. Rosen has more than 15 years of experience in the financial arena, serving
in Illinois and Florida as a certified public accountant, financial consultant,
expert witness and educator. She is owner of Dorothy Rosen, CPA, a public
accounting firm that serves individuals and small businesses.
