How to Erase a Hardship Forgiveness of a Federal Student Loan Debt
- 1
Erasing your federal student loan debt forgiveness is one part of recovering from bankruptcy.Thinkstock/Comstock/Getty Images
Determine how much of your loan was forgiven. Understand that a federal student loan debt hardship forgiveness is usually one item among many that were reduced or discharged completely on your Bankruptcy Discharge Order. Depending on your circumstances and the actions of the court, you received one of two possible outcomes:
1. All federal student loan debt was discharged, or "forgiven," and you are not required to make payments on the outstanding balance
2. Some or most of the debt was discharged or forgiven, but you must continue to make payments on the remaining amount.
Either way, the student loan debt hardship forgiveness is part of your bankruptcy, and there are steps you can and should take to reduce the impact of this on your credit and future education loan prospects. - 2
Forgiven student loans and other debts should show a balance of $0 on your credit report after they have been discharged.Jupiterimages/Comstock/Getty Images
Request copies of your credit reports from the three major credit bureaus (Experian, TransUnion and Equifax; see Resources) one month after you have received your Bankruptcy Discharge Order. Ensure your discharged or forgiven student loan debts (and any other debts in the order) reflect a balance of "$0." If they do not, then contact the credit bureaus and inform them of the discharged debt. - 3
Good money management will erase the negative effects of a hardship forgiveness for federal student loan debt.Jupiterimages/Brand X Pictures/Getty Images
Rebuild your credit by taking on debt you can manage. If you want to erase a student loan debt hardship forgiveness from your report, then you should know that it can take seven years, and that the associated bankruptcy can take 10 years, according to Experian's website.
But by managing your credit and rebuilding your creditworthiness, you can eliminate it as a factor in your credit report long before it actually disappears (or is "erased"). There are several steps you can take that will rebuild your credit steadily:
1. Accept some credit offers. You will be flooded with credit offers shortly after your bankruptcy because you have less debt and cannot immediately file for relief from the courts again. Keep balances under 30 percent of their limits. Pay off all cards and revolving balances monthly.
2. Apply for federal student loans, if you need funds to remain in school. You may be ineligible for many private student loans until your credit is back up to par after a bankruptcy, but U.S. law under Title 11 dictates that you cannot be denied federal student loans because of a previous bankruptcy. Accepting a new federal loan to return to school is therefore a good idea and can help you requalify for private student loans.
3. Look into alternative credit reporting to build a higher credit score. Bankrate's "Dr. Don" Taylor recommends that credit builders look into Payment Reporting Builds Credit (PRBC) and the new FICO expansion score. These reports track performance on rent, utility and other bills usually ignored by the three major credit bureaus.
4. Ask someone you share mutual trust with to put your name on a long-standing credit account. This will help raise your score, even if your access to the account is limited (see Warnings). - 4
With time, you can recover your credit, and the hardship forgiveness of your student loan debt will be a distant memory.BananaStock/BananaStock/Getty Images
Review your credit reports every year and make sure everything on them is correct. If a federal student loan debt forgiveness from your bankruptcy reverts to reflecting a balance, remind the credit bureaus that it was discharged in the proceedings. Be sure that any open credit accounts you maintain are noted on the report as well.
