In order to get your bank credit discharged or forgiven, you would need to file for Bankruptcy under Chapter 7 or Chapter 13. You would need to contact a bankruptcy attorney who would be able to guide you through the bankruptcy process and also help you to get the debt forgiven.
There are few basic questions that commonly arise in the mind of the debtor regarding loan discharge and debt forgiveness. The guidelines given below will help to clarify the same.
1.What is the difference between credit discharge and loan forgiveness?
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A loan discharge occurs due to circumstances beyond the borrower's control and the borrower is released from all or part of the loan obligation.
Loan forgiveness is given due to circumstances within the borrower's control and the Government repays all or a part of the loan obligations.
2.Does bank loan discharge entitle you to a refund?
If your loan is forgiven, you will get a refund on the payment made on the loan. Also, the lender will inform the credit-reporting agencies that the loan has been discharged and any adverse credit history due to nonpayment should be deleted. You may also be eligible to apply for future federal financial aid.
3.What are the eligibility criteria for getting loan discharge or loan forgiveness?
You will qualify for a credit discharge or credit forgiveness if the loan was given under the following conditions - bankruptcy (undue hardship), closed school, death or total and permanent disability or due to teacher loan forgiveness, public service loan forgiveness, income-contingent repayment and income-based repayment
4.How can I apply for a loan discharge?
The government has developed forms for different types of process for you to fill out and send to your loan holder.
5.How does the bankruptcy affect your credit report, if I apply for loan discharge through bankruptcy?
The information that you filed for bankruptcy will be on your credit report for ten years. The information cannot be removed from your credit report but you will be eligible for a good credit score after 10 years.
6.After a loan discharge, what rights do I have against a collector or creditor?
You have the right to be free from harassment and abuse and to send a letter to request that the collector stop contacting you.
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