Bankruptcy and medical school

Hello Eveyone. I am realizing that there is a strong possibility that i may have to file for a chpt. 7 bankruptcy in the near future. Currently I’m only in my sophmore/2nd year of undergrad. I was wondering how would this bankruptcy effect my chances of acceptance into med. school and will i be able to qualify for private loans to afford med. school if i am accepted? Also, are Stafford loans enough to pay for med. school or would i have to take out additional loans?

Thank You.

To the best of my knowledge, med schools don’t do credit checks on applicants. I don’t think it would affect your application.

I also think you’d still qualify for a Stafford loan, but I am not sure. It would probably have an impact on private loans. As to whether you could make it just on the Stafford (about $40K/year), that will depend on the school. Obviously my alma mater is out, as tuition and fees alone are over $40K. You’ll want to push hard to get into your state school and then figure out how to afford it.


My school does require credit checks UPON ACCEPTANCE and acceptance is conditional until you pass. You could only get through my school on Federal loans with the in-state tuition break and a frugal nature. I agree that you may be just fine in your state school.

If you can drop out of school for a year and get an extra job to avoid bankruptcy, it’s worth doing.

I agree with samenewme and consider leaving school for a year and trying to avoid bankruptcy. I think Mary’s right about schools not doing a credit check but if you do get accepted - when they do financial aid, you might have a tough time. Still, you don’t want to go bankrupt. You are looking at at least 10 years of trying to return your credit to decent standing. They just past legislation last year where even if you do declare bankruptcy, it doesn’t wipe away as much debt as it once did. I think here finances have to come before your education.

Do whatever you can do to avoid bankruptcy. Lawyers, friends, family members…most who have not experienced the long term affects will recommend you just get a “fresh start”. However if med school is in your immediate future, within the next 7 years, then I would say that you avoid a bankruptcy at all cost.

Don’t fall for the lie that by the time you become an attending it will be a non issue.

Here’s the thing; once you file you have 7 years. While a 7 wipes all your debts away a mortgage company will look at it and question why you didn’t opt for a 13. If you’re young it will bring into question whether or not you will ever learn how to manage your debts.

I would steer as clear from a bankruptcy as possible. If you are not accepted to a state school and federal funding doesn’t cover school you will NOT be given a private, credit-based loan. One debate you will face and lose against is “If you couldn’t manage your undergrad debt why should we trust that you’ll honor your graduate school debt”.

The other thing is that there are some financial institutions who will ask you have you EVER filed for bankruptcy. Regardless of how many years you are from having had it discharged. A bankruptcy is the modern version of the scarlet letter. Avoid it at all costs. It would be far better to take 1, 2, 3, heck even 4 years off to pay off your debts and learn to manage your money than to file bankruptcy.

I have to dispute a few of your comments here croooz…

First, student loans are no longer dischargable in bankruptcy so you would be responsible for them either way. It’s not an issue of whether or not you will honor the debt, you have no choice but to do so.

Second, chapter 7 bankruptcy stays on your report for 10 years.

Third, one can easily get a mortgage 2 years out of bankruptcy as long as they have had perfect credit since the bankruptcy. And, they will not question why you did ch 7 vs. ch 13.

Finally, there are some institutions that will ask you if you have EVER filed for bankruptcy, and may deny you credit because of it, but there are 50 others out there that will loan you the money. It just takes research and perseverance.

Bankruptcy is certainly something you don’t want to do but it is not the end of medical school. The road will be a lot tougher but doable.

Oh, one other thing… Not every bankruptcy is a result of poor money management. There are many reasons from a business going bad to significant medical expenses. Definitely something we all need to consider as we pursue this line of work.


1st; I don’t know anything about school loans and a bankruptcy.

2nd; 10 years vs 7 makes it worse.

3rd; “Easily get a mortgage…” is not exactly true. If by easily you mean you can get a mortgage then I agree. However there’s nothing easy about opening your financial self for all to see and answer every question about. Not sure who you got your loan with but not only did I have to answer questions I had to provide documentation and explain why 13 over 7 and why I filed for the bankruptcy at all. So I did get a mortgage with a great interest rate but it was not “easy”. I had to have impeccable credit for 3 years. Two years is the bare minimum and the interest rate we were offered at 2 years was too high.

Finally there are many institutions that will loan you money regardless of credit. The problem is never in getting money loaned it’s in the interest rate you have to pay back. Getting a loan for med school at 10+ prime is not exactly a dream come true.

I never said bankruptcy was the end of medical school. My point is that things will be tough enough without adding the burden of a bankruptcy. Not sure the age of the OP but when you’re young any debt feels like a 500lb gorilla on your back. I’ve known plenty of people who filed for bankruptcy for less than $25k. So I’m approaching this from trying to discourage the OP and basically anyone from filing unless they absolute must and not just think they must.

I’m not 100% certain but I’m pretty sure we’re not talking about a business going under in this situation.


I just made the comment about the student loans not being dischargable because of what you had said about honoring the grad school loans. I wanted to be sure people didn’t get the wrong idea that one could just BK student loans.

Same thing with the 10 yrs to 7 yrs… just stating the facts and not saying it was better. However, if it comes to getting a loan and you’re at least 2 years out with perfect credit since, it’s not going to make much difference if any at all.

As for the mortgage, I’m just going off what I learned when my buddy was going through a divorce and bankruptcy at the same time. Basically, I was his line of information and I did a lot of reading. I want to clarify about my statement of “easily get a mortgage”… you are right, you will have to jump through a few more hoops but if all your ducks are in a row an FHA mortgage will be a low cost/low interest option.

Finally, I know you weren’t saying that medical school wasn’t doable with a bankruptcy, I was just stating that it’s only a bump in the path. And, I hope that I wasn’t coming across as trying to argue… That was/is certainly not my point.

We’re all shooting for the same goal, just taking different paths to get there.

It’s cool. I just know what I went thru and wouldn’t wish that on anyone. The only plus was I did it young and got it out of the way…so to speak. You never realize how much credit affects until you file and then you are basically a credit pariah. Things you never bother to think about like renting an apartment, qualifying for a cell phone, opening an account with the video store…there are quite a few more they just aren’t coming to mind. I just remember how much it sucked almost every day. Very emasculating…