Although it is true that many private student loans cannot be discharged through bankruptcy, Virginia residents may be unaware of exceptions allowing the discharge of such loans either in full or in part under some circumstances. Additionally, some private student loans may simply be beyond the applicable statute of limitations for debt collection, rendering them out of the reach of collection agencies through lawsuits or wage garnishment actions.
Pursuant to federal law, loans made to a borrower in order to attend a qualified institution for educational purposes may not be discharged through bankruptcy. This mandate includes those made by private lenders. In the event a person attended an unaccredited institution, however, they may be able to discharge the loan in full through bankruptcy. Unaccredited institutions are not qualified ones for purposes of bankruptcy, and may include such programs as vocational or technical schools.
Even if the school attended was a qualified one, portions of private student loans may still be discharged in the event they were used for non-educational purposes. Finally, some private student loan borrowers may simply be beyond the reach of creditors if the creditors failed to file civil lawsuits within the state’s statute of limitations. The statute of limitations prescribes a time limit within which creditors must sue for collection on debts, and if the period of time has expired with no activity, it can be used as a defense against such an action.
The possibility of discharging private student loans through personal bankruptcy is good news for some borrowers who are drowning in unsecured debt. People who have questions about whether their debts may be discharged may want to seek the help of a bankruptcy law attorney in order to obtain guidance on the subject.