Student Loans and Other Debts That are Not Discharged

Many people forget that they have an obligation to repay student loans. This may be because college seems so long ago or because the money was not spent on tangible things. However, regardless the reason, student loans are in fact an obligation that you have. Student loans are one of the most difficult types of debts to escape. Most student loans survive bankruptcy and can still be collected decades after college because there is no statute of limitations on the repayment of such debts.

Most student loans are made by private banks but are subsidized by the federal government so they have relatively low interest rates. Two-thirds of students at private four-year colleges have student loans of an average of $17,000 by graduation. Students must state repaying their student loans six months after graduation and generally have ten years to repay the debt. However, there are deferments and forbearances available by most lenders that can believe you from the payments for a temporary period of time. Be cautioned that in some of these circumstances that interest continues to accrue and may be therefore increasing that amount that is owed.

The Department of Education over the past five years has been pursuing student loan debtors more aggressively. In an attempt to collect the debt, the Department of Education can garnish paychecks, levy bank accounts and seize tax refunds and Social Security without a court order. Student loans from government agencies and not-for-profit entities have always been not dischargeable in bankruptcy. Now even nongovernmental agencies and for-profit organizations student loans are not discharged in bankruptcy. Given these changes, no student loan is dischargeable unless the debtor can show undue hardship which is an extremely difficult standard to meet.

If student loans are not paid as agreed by the lender, they can garnish wages, levy your bank accounts or even intercept your tax refunds. If you owe a large amount in student loans, this could result in tax refund being taken for years. While filing bankruptcy does not discharge student loans, calling and attempting to work out a payment arrangement with the student loan companies can be beneficial.