OMG.. do you make this stuff up as you go along?? And yes, people DO put more weight on student loan defaults, especially since one of the things that the government can to do cure the default it to cancel licensure--something that might have an affect on, Oh, I dunno, say EMPLOYMENT? You bet there is a difference.

Some loans, such as Perkins loans can be reported to the credit bureau indefinitely. NOTE: if the OP is talking about federal student loans, the rules are stricter than just a non secured personal loan.

Don't take my word for it--read on.


Filing Bankruptcy with Student Loan Debt


For many individuals with mounting debt, unfortunately the best way to get out of the red is to declare some form of personal bankruptcy.
With the average college loan debt around $19,000, it can be quite a burden for people watching every penny. The average credit card debt is around $10,000. Fixed cost payments usually consist of mortgage, car, insurance, utility, and in this case student loan payments. As mentioned before, if the average debt in America for student loans is 19K, then that monthly payment is likely to be high, right along with mortgage and car payments.
Forgiveness of Student Loans after Bankruptcy

It would be nice to just wipe the slate clean concerning all of your debt, including student loans. However, being forgiven for your student debt is only reserved for those truly in need, and by this I mean it's a rare occurrence.

Forgiveness is reserved for those who can demonstrate that having to pay off their student loans will cause undue hardship. This is determined by the bankruptcy court. Student Loans are rarely forgiven since they are government funds that were dispersed with low interest to people with no credit history. You don't expect the IRS to forgive you on all taxes that are owed, so expect the same treatment with your student loan.
Bankruptcy Court and Your College Debt

Most student loan debt is secured debt that was borrowed from the federal government that cannot be erased. Unsecured student loan debt from private and non-profit organizations is also not erased by bankruptcy. This law went into effect on October 17, 2005.

You may be wondering if there is a difference between a Chapter 13 and Chapter 7 bankruptcy when it comes to student loan debt. The answer is no, they cannot be erased. There are a few options that the court may decide so that your student loans get paid first and have a priority over any other unsecured debt that you may have.

Student Loans are often put into a separate category by the bankruptcy court to give it priority. Debt that receives the lowest priority is usually credit card debt. The court may decide, in a Chapter 13 bankruptcy, to allocate most of your monthly payments to your student loans and away from unsecured debt such as credit card debt.