Bankruptcy can’t stop you from getting financial aid, but it can make it harder for you to borrow loans to return to grad school or pay for your child’s education.
Filing bankruptcy does a lot of things. It wipes out credit card debt, medical bills, personal loans, and so on. It stops foreclosures, auto repossessions, and wage garnishments. It halts collection calls and most lawsuits. All of those benefits come at a cost. Your credit score will take a hit. And if you file a Chapter 13 bankruptcy case, you’ll have to make payments to the bankruptcy court and your creditors for several years.
The one thing bankruptcy doesn’t do is block you from getting new financial aid.
Federal law prohibits the U.S. Department of Education from rejecting your FAFSA application because you filed for bankruptcy. As a result, you can get new Pell Grants, work-study money, and most federal student loans during or after your case.
But here’s where things get tricky: The department can require you to get an endorser or cosigner if you’re seeking to borrow a Parent or Grad PLUS Loan and have an adverse credit history.
Related: Can I Get a Student Loan After Filing Chapter 7 Bankruptcy?