How to Get a Loan for College While Under Chapter 13 Bankruptcy

If you have filed for bankruptcy or intend to file, but wish to improve your life and future income through higher education, a loan may be your only option. For obvious reasons, bad credit negatively effects your ability to get a loan. Here are the most common ways to get a loan for college while under Chapter 13 Bankruptcy.

Instructions

1. Keep up on any current loans repayments (credit, student, business or personal) and bill payments. As long as your current credit history (for example, the past year) is good and shows repayments in full and on time in all areas of your life, Federal, state or other college financial aid is typically not denied.

2. Apply, through your parents, for a Federal PLUS (Parent Loan for Undergraduate Students) or Grad PLUS (for graduate or professional students) loan. With a PLUS loan, a parent or stepparent may borrow money for your education. The credit check requires that you do not have a bankruptcy, but as long as you have a co-signor (someone with exceptional credit willing to take the responsibility of paying back the loan if you default) you may still be considered for the loan even with a poor personal credit history.

3. Contact your college's financial aid office for information on private loans and how your bankruptcy affects your eligibility for such loans. In most cases you will likely find that as with the PLUS loans you will need a co-signor.

4. Create a list of collateral (i.e., house, newer car or other items) and draft a thorough educational and/or business plan which outlines why you are seeking a loan and how the loan, through payment of an education that may create social and employment advancement, will improve upon your current circumstances.

5. Present your plan to a local lender along with your list of existing collateral. The collateral list presents the assets which can be used as repayment in the event that you default on the loan. Your plan shows the lender that you have thoroughly thought out your current financial situation (i.e., the bankruptcy), how higher education will improve upon that situation and that you are making a legitimate effort to turn your life around.