Can I Payoff My Student Loans With My Credit Cards and Then File Bankruptcy? – Brian

“Dear Steve,

I have about $100k in private student loans, and about $50k in stafford loans. I have no other debt besides the revolving balance about $1000~$1500 that I pay off every month. My unsecured debt available for use is about $20k (credit cards, unsecured line of credit, etc.) My credit is good (700 ~750 range) and have no delinquencies. Right now, I am basically treading water with my monthly payments on my student loans. I have an opportunity to get about $75k in unsecured loan from a lender for debt consolidation.

My question is; should I use my unsecured credit sources to pay off my private loan obligations, then file for bankruptcy? Would that be considered fraud because of the intent?

Do You Have a Question You'd Like Help With? Contact Debt Coach Damon Day. Click here to reach Damon.

Also, is good credit “worth” $100k of debt?


Dear Brian,

Well, if I remember correctly, technically student loan debt paid off with credit cards is not eligible for discharge in bankruptcy. But I’m not 100% confident about that. And I don’t that’s one of those rule or reality things. The best advice would be for you to click here to find a local bankruptcy attorney to talk to and ask them.

As for the $1,000 and good credit, yes. This is money that you need to spend anyway so you might as well let it keep your credit up. But if you decide to go the bankruptcy route then that kinds of takes care of itself.

Please update me on your progress by

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Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
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