Student Loans - Third Party Debt Collector - Can I file Bankruptcy?

by Stephanie
(Colorado Springs, CO)

If my student loans are now in the hands of a third party debt collector, can I file bankruptcy?

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Dec 30, 2011
Student Loans - Third Party Debt Collector - Can I file Bankruptcy?

You can file for bankruptcy, but if the student loans are federally guaranteed, bankruptcy will not wipe them out. In other words, you will continue to owe the loans and there is virtually nothing you can do to get rid of your student loan obligation.

You may want to consider filing for bankruptcy anyway if you have a lot of other debt relative to your income that you are having problems repaying. Depending on the kind of bankruptcy you file, some or all of that other debt will get wiped out in bankruptcy, which might make it possible then for you to repay your student loan debt. However, whether or not to file for bankruptcy is not a decision to take lightly and you need a bankruptcy attorney to evaluate your finances and advise you about whether or not it's a good course of action for you. Also, the bankruptcy process is extremely complicated and so we never advise anyone to handle their own bankruptcy. You really need an attorney's help to get the maximum benefit from filing and to ensure that no mistakes are made that might cause the court to end your bankruptcy prematurely.

The best way to deal with student loans that you are having problems repaying is to address the problem right away -- before you default. When you deal with them sooner rather than later there are options available that can help you avoid a default, like consolidation, deferral and forbearance, However, those options are not available after you default. Then it's all about the collection process.

The best advice I have for you at this point is to see if you can possibly work out a way with the debt collector for paying off your loans. It's doubtful however because the "deck is stacked against you" when you default on student loans. Uncle Sam WILL get his money. Therefore, unless you are able to repay the loans, it's probably only a matter of time before your wages are garnished and at some point, your income tax refunds may be taken. This will go on until your debt is repaid. Meanwhile interest and penalties will accrue on your unpaid loan balances and the fact that you defaulted on your loans will badly damage your credit history and credit score.

I hate to be so negative, but the federal government takes student loan defaults very, very seriously. Unfortunately, especially in this economy, there are thousands of former students who are in your same boat and although Congress and the President have talked about doing something about the situation, nothing has happened to date.

Jan 06, 2012
superiour truck school
by: bruce

In 1988 i went to superiour truck school,,they said they would help me find jobs when i got home,,well when i got home i called them every day and they had nothing,,so eventually i found a job making 5 bucks a hour on my own driving a ice truck....i have never sent them a dime...they were found to have unlicensed instructors and fraud,,,,they lost the us dept od education has been on me for years and its been in a collection agency....ive never sent them a dime,,,if theyu garnish me at sometime ,,,even tho im only 50 percent service connected. if they garnish me,,,im gone into the abyss.over the clouds

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