Financial Aid, Student Loans and Bankruptcy

Financial aid and Student Loan debt can affect a bankruptcy case.  Many students nearing the completion of college need to file bankruptcy.  This is due to the fact that they have not only accumulated student loan debt, but also regular unsecured credit card debt during their time in school.  However, in many cases, the student still has a semester or two left and still receive financial aid and student loans.

If you are a student and you file bankruptcy, you will have to report this income.  To report the income, you need to average the amount received from the student loan.  For example, if a semester is 4 months, and you receives $8,000 for living expenses each semester, than your average income is $2,000 per month.

You need to list this average income on Schedule I as well as on Form 22, the Means Test.  Additionally, you must list all of your financial aid or student loan income you received annually on Section 2 of the Statement of Financial Affairs.  For further assistance, you should contact a bankruptcy attorney.  They will be able to guide you through the bankruptcy process.