Will Filing for Bankruptcy Affect My Children?
When it comes to the bankruptcy filing, it is not an easy decision to make. The bankruptcy filing comes with some social stigma too. While bankruptcy is the ideal solution for you if you are dealing with a dire financial situation, you might be scared of the whole process. The long paperwork, the court dates, and consulting a Pittsburgh bankruptcy lawyer can be quite daunting. At the same time, you are thinking of all the people at your workplace. Are you worried about your kids too and whether you will be able to get a student loan for them or not in the future? Take a look.Student Loans and Bankruptcy
Given the expenses of higher education in the USA, a student loan is the second longest-running expense for many after the house building loans. From 1990 to 2009, the tuition fees got increased to 275%. Hence, almost every student will have to borrow even a certain amount of student loan. Now, if you are a parent and you have filed for bankruptcy, then you need to know that whether it will affect your student loan application for your student or not.
The hopeful news for you is that it won’t. According to the Bankruptcy Reform Act of 1994, the U.S. Bankruptcy Code 11 USC § 525 has been altered which denotes that the government cannot deny the federal loans owing to the bankruptcy filing of the debtor. However, for private loans, it will affect the application.
However, for federal PLUS loans, the applicant is not supposed to have a bad credit history or a history of filing bankruptcy. But there are a few exceptions in this case when you are getting a PLUS loan for your student. They are:
- If you have filed for bankruptcy five years back, you are in the clear again. Now, you can apply for a student loan for your child and your application will remain unaffected.
- However, if you are denied for PLUS loan, there is an advantage for you. You get a beefed-up grant for Stafford Loa. If you are ineligible to get PLUS loans in the USA, Stafford loan offers you some extra padding. For sophomore and freshmen years, you will get annually $4000 and for junior and senior year, you will get $5000 annually.
Also, you need to know that you have been bankrupt with unstable financial history, you will be eligible for various collegiate support systems and activities. Your child can take part in work and study programs, grants from the school, and even federal grants. Hence, before filing for bankruptcy, you need to discuss the matter with an experienced Pittsburgh bankruptcy lawyer.
While bankruptcy can help you eliminate debts and silence the creditors, it can have long-term implications on your financial future decisions too. To know what they are, come to us at Pittsburgh Bankruptcy Law Group. We will help you out from your dire financial crisis.