If you’re struggling with debt, and can’t get your college transcripts because you’ve defaulted on your student loans, filing for bankruptcy might help. Not only will it wipe out qualifying debt, such as credit card balances, medical bills, and personal loans, but your school will likely have to release your college transcripts.

(Learn about the two most commonly filed bankruptcy chapters in What Are the Differences Between Chapter 7 and Chapter 13 Bankruptcy?)

Defaulted School Loans and College Transcripts

Some schools help student loan lenders collect by denying borrowers access to official college transcripts when their student loans are in default. Although it might seem unfair, the Department of Education doesn’t stop schools from withholding official transcripts when borrowers aren’t paying on student loans.

Also, certain states have laws which specifically allow state schools to withhold official transcripts when student loans are in default. These efforts are designed to encourage repayment of the delinquent loans.

Bankruptcy Stops Student Loan Collection Actions

In most cases, when you file for bankruptcy, a temporary injunction (an order prohibiting specified conduct) called the automatic stay goes into effect. The stay prohibits most creditors from taking actions to collect a debt incurred before you filed for bankruptcy.

Most courts have found that withholding official transcripts from a bankruptcy debtor is a form of debt collection that the automatic stay prohibits. If you file for bankruptcy in one of these courts, the school can’t refuse to give you your college transcripts while your case is pending.

Courts have also found that it doesn’t matter that student loans aren’t dischargeable (don’t go away) in bankruptcy unless you can prove that to pay them would cause you "undue hardship." Most agree that a school cannot withhold your official transcripts while the automatic stay is in effect, regardless of the loan’s dischargeable status.

(Learn more about student loan debt in bankruptcy.)

How Much Time You’ll Have to Get Transcripts

The automatic stay doesn’t last forever. If you still owe your student loans after your bankruptcy ends—and most people will—the school will be able to withhold your official transcripts again once the stay is over.

The stay will remain in effect until one of the following things occurs:

• you receive a bankruptcy discharge
• the court dismisses your bankruptcy, or
• the lender files and wins a motion to lift the automatic stay.

The period differs depending on whether you file under Chapter 7 or Chapter 13.

• Chapter 7 bankruptcy. If you file for Chapter 7 bankruptcy, you’ll need to act fast because the case will take approximately three to four months to complete. You’ll likely want to request the transcripts soon after filing.
• Chapter 13 bankruptcy. By contrast, filing for Chapter 13 bankruptcy will give you more time. The filer must pay into a three- to five-year repayment plan, so you should have plenty of time to get your official transcripts.

Consult With a Bankruptcy Lawyer

Of course, filing for bankruptcy just to get transcripts doesn’t make sense, and might even be considered an abuse of the process. For help determining whether bankruptcy is right for you, speak with a knowledgeable bankruptcy lawyer.

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