by Max Gunderson
A good quality education is important. However, colleges and universities cost quite a bit of money and there aren’t very many students who are able to attend college without the help of some federal financial aid. There are basically two types of financial aid that most college students attempt to acquire. There is a credit based form of financial aid that base the availability of the financial aid on the applicant’s credit. The other form of financial aid is a need based financial aid in which the applicant is awarded monies based on the amount of need that they have for the funds. As you can imagine, filing for bankruptcy has a greater affect on one of these types of financial aid.
Bankruptcy filings are on the rise in Arizona and nationwide, the number of college students filing for bankruptcy is also increasing. The good news for the students is that filing for bankruptcy does not affect a student’s ability to obtain need-based financial aid. The two most popular forms of federal financial aid to undergraduate college students are Pell Grants and Stafford Loans. For most students that means Pell Grants and Stafford Loans, both subsidized and unsubsidized are not affected by an individual declaring bankruptcy. When applying for both Pell Grants and Stafford Loans your credit is not considered in determining your financial need. Students are not disqualified from receiving need based financial aid because of filing for bankruptcy protection.
Filing for Chapter 13 bankruptcy protection creates a small hurdle for students with Stafford Loans. Students with Stafford loans will need permission from the bankruptcy trustee and bankruptcy court to incur the additional debt of the Stafford Loans. The request to take on more debt while in a Chapter 13 bankruptcy are handled by the bankruptcy court on a case by case basis. You may want to consider talking to a qualified bankruptcy lawyer if you are considering taking out loans for college and are currently in a Chapter 13 bankruptcy. Your bankruptcy lawyer will be able to advise you on getting your Stafford loans approved through your Chapter 13 bankruptcy trustee.
Filing for bankruptcy has a big affect on credit based financial aid. Credit based financial aid includes student loans from private lenders such as Sallie Mae. Applying for credit based loans to attend college is relatively the same as applying for an unsecured personal loan. Your approval of such a loan is going to be based on your credit score and credit history. If you have recently filed for bankruptcy, chances are that your credit score is quite low and that your bankruptcy will play a part in the decision of the lender to give you the credit based financial aid loan.
If you are confused about your financial aid options but know that you are in need of financial aid in order to attend college, contact your student financial aid office for assistance. Your financial aid office and your bankruptcy attorney in Arizona can work with you in order to better help you take advantage of your student loan options. Filing for bankruptcy will not only eliminate your personal debt, it will also free up money that you can use to pay for college or money that you could use to repay a college financial aid loan. Your bankruptcy lawyer and your financial aid officer are the experts, lean on them for guidance to obtain your college financial aid after filing for bankruptcy.
In times of financial woe, seeking counsel from an experienced bankruptcy lawyer is of utmost importance for individuals and businesses alike. While bankruptcy may not be for everyone, the bankruptcy attorneys at The My AZ Lawyers law offices in Tucson can help assess your debt problems and offer legal options that are right for you.
For more information about filing for Chapter 7 bankruptcy, Chapter 13 bankruptcy filing, bankruptcy planning or filing for bankruptcy, contact one of our bankruptcy lawyers and speak to any of our experienced attorneys in Phoenix, Chandler, Tucson, Glendale, Mesa, Flagstaff or anywhere in Arizona. Contact one of our regional offices It’s time for a fresh start.