If a school loan goes into default and gets sold to a collection company, doers it thenit becomethe kind of debt that can be discharged in bankruptcy?

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If a school loan goes into default and gets sold to a collection company, doers it thenit becomethe kind of debt that can be discharged in bankruptcy?

Is this true? I have an “alternative” private school loan through Great Lakes and they will offer me no form of flexibility with my loan and I continue to have to pay $950 per month with is not manageable for me. Unfortunately my father is a co-signer and I know that they will come after him if I default on my loan, but we just need to know what our options are.

Asked on August 29, 2011 Washington

Answers:

Mark J. Markus / Mark J. Markus, Law Offices of

Answered 10 years ago | Contributor

No, the character of the debt does not change because it gets sold to a collection agency.  However, I suppose there is always the possibility that the collection agency won't treat it as an educational loan after bankruptcy--meaning, THEY might consider it discharged, even though it legally isn't (which works out the same way for you).   But as you point out, regardless of whether you "discharge" your obligations on that loan in a bankruptcy case, your co-signer will still be liable.

Mark J. Markus, Attorney at Law

Handling exclusively bankruptcy law cases in California since 1991.

http://www.bklaw.com/

bankruptcy blog: http://bklaw.com/bankruptcy-blog/

Follow Me on Twitter:  @bklawr

Mark J. Markus / Mark J. Markus, Law Offices of

Answered 10 years ago | Contributor

No, the character of the debt does not change because it gets sold to a collection agency.  However, I suppose there is always the possibility that the collection agency won't treat it as an educational loan after bankruptcy--meaning, THEY might consider it discharged, even though it legally isn't (which works out the same way for you).   But as you point out, regardless of whether you "discharge" your obligations on that loan in a bankruptcy case, your co-signer will still be liable.

Mark J. Markus, Attorney at Law

Handling exclusively bankruptcy law cases in California since 1991.

http://www.bklaw.com/

bankruptcy blog: http://bklaw.com/bankruptcy-blog/

Follow Me on Twitter:  @bklawr


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