Originally Posted by LoriS
This is not true. If she just doesn't pay the bills, she will either have write-offs on her credit report (VERY bad, in a league with bankruptcy) or she will have many records on her report that say she paid, 30, 60, 90 or more days late. That's not going to look any better than bankruptcy.
The best advice would be for the OP to talk to someone knowledgeable about bankruptcy laws. Then she can know what she's getting into. Then she can talk to the financial aid officer(s) at the school she wants to attend.
As for the Stafford Loan, you won't be denied for having a bankruptcy, but forget about private loans, as others have said. Especially these days, having good credit is essential to get a private loan. Although a really good (credit-wise) co-signer might be able to make that problem go away.
The bankruptcy laws are easy: You can't bankrupt student loans..period.
You have physicians and lawyers and pharmacists to thank for that change when they were routinely bankrupting 6--figure student loans almost immediately after graduation.
If you watch any of the financial shows, especially Suze Orman, she states this over, and over and over again.
A bankruptcy attorney cannot give you an opinion on your ability to obtain FUTURE credit. His job rests entirely with getting the paperwork together to go to bankrtupcy court and making sure that all accounts are included and property that is supposed to be retained, is retained.
Student loans are not credit score driven, but bankruptcies are catagorized as a "major financial event"...collections are not....charge-offs are not, judgements and reposessions and foreclosures ARE.
Charge-offs are bad but they are not the same as a bankruptcy. With a charge-off, the CREDITOR is giving up on collecting the debt..with a bankruptcy, you are claiming that you NEVER plan to pay the debt...that is the difference.
The dollar amount per charge-off makes a difference.
To the poster who had a business bankruptcy: Was it set up as an S-corporation or incorporated?
That makes a huge difference. If the BUSINESS was bankrupt, you were not...therefore, that is why you were able to get the loan.
There is a difference between having "no credit", "bad credit", and credit with a "major financial event".
It is very, very important that she speak with an underwriter of student loans...not a counselor, but someone in the bank who has actually had APPROVAL authority, who understands exactly what is allowed and isn't.
Loan officers don't approve loans, nor do loan counselors.
Otherwise, the OP is risking starting school and not having the money to finish it...which none of us want to see happen.
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