Illinois Bankruptcy Lawyers - Student Loans


Notice 1 Notice 1

11 U.S.C. 525 provides (c) (1) A governmental unit that operates a student grant or loan program and a person engaged in a business that includes the making of loans guaranteed or insured under a student loan program may not deny a loan, grant, loan guarantee, or loan insurance to a person that is or has been a debtor under this title or a bankrupt or debtor under the Bankruptcy Act, or another person with whom the debtor or bankrupt has been associated, because the debtor or bankrupt is or has been a debtor under this title or a bankrupt or debtor under the Bankruptcy Act, has been insolvent before the commencement of a case under this title or during the pendency of the case but before the debtor is granted or denied a discharge, or has not paid a debt that is dischargeable in the case under this title or that was discharged under the Bankruptcy Act.

Illinois Bankruptcy Lawyers - In Practice

In summary, student loans should not be denied, unless a prior student loan was charged-off, or is subject to charge-off in a pending case. Realistically, the protection provided by the Code is grossly ineffective, and bankruptcy lawyers normally advise clients to expect denial of all credit while a case is pending, and further, for at least 24 months following discharge. These bankruptcy lawyers are conservative.

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