QUESTION
Can I file Chapter 7 if I have extensive student loans?
Asked on Mar 07th, 2013 on Bankruptcy - Pennsylvania
More details to this question:
I am currently in my fellowship training to become a cardiologist and I have 2-3 years left. The majority of my medical school loans ( about $200,000) are in forbearance and are not an issue but my undergrad loans (about $50,000) are being paid and my personal debts are overwhelming me. I have more than $15,000 in credit card debt that is bringing me down and I am paying almost $500 a month in undergrad debt. I would have no problems paying back my debtors in 3 years once I have finally finished my training but I do not think I will be able to make it to that point given my credit cards compaines have filed law suits against me. Can I file bankruptcy with such large student loan amounts (about $250,000). I would be happy just to lose my credit card debt and keep my medical student loans in forbearance. I have a wife, 2 small children and a third on the way.
1 ANSWER
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Generally, student loans are not dischargeable in bankruptcy. There is a very limited exception known as a hardship discharge which, in the Third Circuit covering PA, NJ, and Delaware, is extremely difficult to qualify for. One example of a case in which you might qualify is if you had a chronic illness that prevented you from being gainfully employed at any time in the future.
If some of the student loans were used for expenses other than tuition and were private loans, it may be possible that they can be discharged.
Answered on Mar 09th, 2013 at 12:10 PM