What to do about bankruptcy and eligibility federal student loans?

UPDATED: Jun 14, 2012

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What to do about bankruptcy and eligibility federal student loans?

My wife has been going to school for 2 years and received federal grants and loans. We filed for bankruptcy 2 months ago. We just found out that the federal loans stopped because of that. We did not include this in the bankruptcy because we planned to pay back what we owed once she graduated. They say she has to pay $3800 up front now before she can graduate next month because her loan was stopped. I didn’t think this was legal, I thought that you could not put federal loans in a bankruptcy or be stopped.

Asked on June 14, 2012 under Bankruptcy Law, Arizona


FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

Under federal law, student loans essentially cannot be discharged in a bankruptcy before a certain period of time if ever. The bankruptcy filing of you and your wife triggered a red flag with respect to the federally insured loan that was being received for school where future loan payments were stopped.

I suggest that you read the terms of your loan agreement. Most likely a bankruptcy filing gives the lender the right to make any future loan payments.

If your wife wishes to graduate on time, you and she need to find a way to get the additional $3,800 paid for school tuition.


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