There are a variety of reasons why someone ultimately needs to file for bankruptcy. The most common explanation is medical bills, according to an article from USA Today. Another common explanation is the rising cost of attending college.
Many students end up taking out loans to get an undergraduate degree. However, students every year also get into too much debt simply because they do not know how to handle their finances on their own. It is easy to accumulate too much debt when you get a credit card for the first time.
The reason many students have to file for bankruptcy is due to accumulating too much debt from student loans. However, it is important to consider that filing for bankruptcy will probably not eliminate debt from student loans. The idea behind filing for bankruptcy is that it gives you a fresh start by eliminating certain debts. However, it does not apply to everything. Student loans, alongside criminal fines and child support, cannot go away with bankruptcy.
Applying for financial aid
Some students end up with too much debt in the middle of their education. You may worry about having to drop out of school with a ton of debt and no degree. Fortunately, it does not have to be that way.
Filing for bankruptcy should not affect your financial aid in any way. It can be different for your parents, though. There are some loans that will not provide funds to a student if his or her parents filed for bankruptcy in the past. Luckily, that only applies to certain federal loans. You should look into the Stafford loan, which does not take into account credit history. Therefore, parents can still be co-signers on the agreement to help you receive funding. There are numerous ways to pay for college, and sometimes a student needs to get creative.