federal student loan After graduation from college, most people make plans to find a decent paying job, buy a new home, and live a relatively comfortable life. Unfortunately, this isn’t always the case. Today, the economy is shot, and some graduates have to move back in with their parents. In addition, a weak job market makes it difficult to secure employment. As a result, a few graduates find themselves stuck. They don’t make enough money to meet their expenses, which can lead to credit default. If the problem continues, bankruptcy may be the only solution.

However, graduates cannot include a Federal student loan in a bankruptcy. The government protects Federal lenders. Thus, persons who declare bankruptcy can have all their other debts discharged (credit cards, installment loans, auto loans, etc.), but they can’t discharge a Federal student loan.

If you want to get from under a Federal student loan debt, consider transferring the balance to a low-interest credit card or refinance the loan with a private lender. Since the government doesn’t protect these creditors, you’ll be able to include the college debt in a bankruptcy.