I've been searching, but I can't seem to find an answer. I have Stafford loans in repayment and I am about to send off an economic hardship deferment form but I am also about to file BK7 in a couple months. From what I read, SLs go automatically into forbearance in the case of a BK but if my loans are already deferred, what will happen? Will I need to defer again after BK is discharged or will the 12 mos just go on as if BK didn't happen? Should I not defer until after discharge?

Also for those of you who were still in school during BK does anything happen to the SLs during BK? Do these get sold back and forth as well?

Thanks!

Hi Swampy,

I just filed for BK this past week and also have a student loan I was asking for deferral on.

From what I understand this is how it works: Yes, they do go into automatic forebearance for the duration of the bankruptcy. If you had a deferral or forebearance before the BK filing, you would need to contact them about reinstating it. If you did not have one before filing, you have to start paying again when BK is discharged. If you file Ch. 13, they will be included in the Ch. 13, but when 13 is discharged, you need to keep paying them as they are not wiped out.

Personally, I have a student loan and had asked for a deferral, but they kept dinking around with whether they would grant it to me or not. I filed BK this past week and was told that I can choose to pay on it during the BK process or I can wait until after it's discharged.

However, from what I have heard, the entire time you are in BK, interest and charges do accumulate and are added to your balance- so it can be a shock when you are out of BK and see what is owed.

I am planning on paying on it during BK so that I can avoid that, but if you can't- I had been told by our atty. that it's "optional".

Of course, talk to your atty. about it too- I am NOT a professional! This is what I was told by our atty.

Good luck!

The words "Bankruptcy" "student loan" and "discharge" in the same sentance is hilarious. Some extremily misinformed consumers think bankruptcy automatically discharges all debts, including student loans. Some attorneys seem to help this myth.

To effectively discharge student loans, whether private or federal, you need to:
-Specifically include each and every student loan in your Bankruptcy, have your attorney notify each and every lendor of your Bankruptcy and all details, including:
-a "petition for undue hardship" discharge.

Unless you are given a discharge for undue hardship you will be required to repay your student loans. Any lendors that you fail to notify of your intent will be able to legitimately dispute the discharge if your attorney failed to notify them.

Federal law supercedes any state law. Don't let your attorney lie to you and tell you your student loans will be automatically discharged and an undue hardship petition isn't necessary in your state.

Cynic....

Maybe you should READ the postings before replying. Neither the OP or the secondary poster expects their loans to be discharged in BK. Nobody lied to them.

Maybe I misunderstood the 2nd posters comment. Does discharge refer to discharging the loans or teh legal discharge of the bankruptcy?

Regarding the ops question:

The current lendor of your loans may file a claim with the guarantor for BK7. They also may simply place a mandatory/admin forb. If you qualify for EHD and the EHD is granted before you notify them of your BK7 they may continue the EHD and suppress correspondence until the BK is resolved.

I went through a BK7 while still in school. My loans were through Sallie Mae and were denoted as deferred on my credit reports prior to filing. The status temporarily changed to "included in bankruptcy" after I filed and before I received my discharge. I freaked out when I saw that and called Sallie Mae and a CSR explained that the loan would show as deferred once I was discharged. When I received my discharge paper, I sent a copy to Sallie Mae to be safe and the next month my credit reports showed my loan as deferred once again.