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Everything You Want to Know About Chapter 7 Bankruptcy

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chapter 7 bankruptcy

Debt is a familiar companion for most in the United States. And even though we expect to see collective consumer debt surpass $4 trillion this year, most consumers are able to maintain payments and manage debt effectively. Unfortunately for some consumers, such as the 12.8 million who filed bankruptcy petitions between Oct. 1, 2005 and Sept. 30, 2017, debt can become an unmanageable burden that they can’t imagine themselves escaping. Whether the financial struggle is due to unexpected life circumstances or mismanaged money, declaring Chapter 7 bankruptcy might be an option worth considering.

How Chapter 7 bankruptcy works

Bankruptcy is designed as a form of relief to debtors, allowing them to discharge or reorganize their debt. In the case of Chapter 7 bankruptcy, the goal is to liquidate any nonexempt assets and use the proceeds to pay creditors. Which assets are considered nonexempt are defined by your state, but are generally comprised of assets that are not needed in the maintenance of a home or job.

The initial step for most may be to meet with a bankruptcy lawyer to get details on the process along with an overview of the benefits and drawbacks based on your personal situation. After that, if you decide that Chapter 7 seems like the right choice, you need to get credit counseling within the six months before you file.

Assuming that the credit counseling doesn’t find an alternate option, you then file for bankruptcy, submitting the appropriate forms and information (outlined below). After filing, a trustee is appointed to the case. Within 40 days of filing, the trustee will set up a meeting of creditors, during which all the listed creditors and the trustee are able to question the debtor about their financial situation. The trustee handles the administration of the bankruptcy, determines whether there’s a presumption of abuse, liquidates assets, makes payments to creditors and submits asset reports when relevant.

Finally, about 60-90 days after the meeting of creditors, if no creditor files a complaint or objection, the bankruptcy is discharged. Once this is done, the remaining eligible debts are wiped out and the debtor is no longer responsible for maintaining payments. This is also the case in a “no asset” bankruptcy, where there are no assets to liquidate and, as a result, no payments made to creditors before discharge.

It’s understandable why a person might want to file Chapter 7, since it allows borrowers a fresh start without managing ongoing payments, but there are rigid requirements to qualify since the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) was introduced to help ward off abuse of the bankruptcy system.

Chapter 7 eligibility

Before determining whether you are eligible for Chapter 7 bankruptcy, determine whether you want to use this option at all. Chapter 7 is often referred to as a liquidation, which means that assets you own (such as a recreational or second vehicle, or tools) can be sold by the trustee in order to pay your debtors. For some consumers, that might be enough to encourage them to look at alternatives, such as Chapter 13 bankruptcy.

But if you determine that the positives of Chapter 7 outweigh the negatives for you, see if you qualify to file. There are a few simple deal-breakers that immediately disqualify you from filing Chapter 7:

  • You’ve had a Chapter 7 bankruptcy discharged in the past 8 years
  • You’ve had a Chapter 13 bankruptcy discharged in the past 6 years

A few more situations that could make you ineligible for Chapter 7 include:

  • You’ve had a Chapter 7 or Chapter 13 bankruptcy dismissed in the past 6 months for reasons such as violating a court order
  • Your debts were obtained through fraudulent means (which could include making false statements on a loan application)
  • You are filing as a corporation or LLC

Your income may prove yet another obstacle between you and Chapter 7. This is determined by taking a means test. Through this test, your last six months of income is measured against the median income of your state. If your income is the same or more than the median, you must complete a second form that lists your expenses. The total allowable expenses are then compared with your income to determine whether you qualify to file for Chapter 7.

What debts are forgiven or discharged under Chapter 7?

The goal of Chapter 7 bankruptcy is to discharge a debt, but only eligible debts will be discharged. So, what’s not eligible? Some of the most common debts you can’t discharge include:

  • Child support
  • Alimony
  • Certain tax debt
  • Death and personal injury claims due to a DUI
  • Debt obtained through fraud
  • Debts not listed in the bankruptcy
  • Most student loan debts

What does that leave? Dischargeable debts such as:

  • Medical bills
  • Consumer debt, such as credit cards
  • Personal loans and promissory notes
  • Some lawsuit judgments
  • Lease and contract obligations

How to file Chapter 7 bankruptcy

First steps

Get a credit counseling briefing with a state-approved provider

Must be done within the 6 months before your filing

Determine which court will handle your case

Find the right court through tools online for your district

Discover what state-specific requirements are for your filing

Some states will list special forms on their website that are required by your local court

Form B2010

A notice required by 11 U.S.C. § 342(b)

Forms for the initial petition

Form 101

Voluntary petition

Form 121

Statement about Social Security numbers

Form 119

Preparer’s notice

Form 2800

Compensation disclosure for preparer

Form 103A (when relevant)

Request to pay fees in installments

Form 103B (when relevant)

Request to waive filing fees

Form 101A (when relevant)

Initial eviction judgment statement

Form 101B (when relevant)

Payment of eviction judgment

You will also be required to submit the certificate of completion for credit counseling and a list of all creditors

Within 14 days of filing

Form 106Dec

Individual debtor’s schedules

Form 106Sum

Asset and liability schedule

Forms 106A-J

Property, debtors, income, leases, expenses statement

Form 107

Financial affairs statement

Form 2030

Compensation disclosure for attorney

Form 108

Chapter 7 filing intention

Form 122A-1

A statement of current monthly income for Chapter 7

Form 122A-2

The means test calculation for Chapter 7

Form 122A-1Sup (when relevant)

Statement of no presumption of abuse

Finally, you’ll be asked to submit a copy of all income (pay stubs and remittances) received in the 2 months before filing

One of the very first things a bankruptcy filer must do before filling out a single form is to get a credit counseling briefing from a provider that’s approved in the state where the bankruptcy will be filed, a step that must be taken in the six months before your filing.

Melinda Opperman, executive vice president of the nonprofit, says that this consultation entails an in-depth review of a debtor’s budget and explores different recommendations and options, but it goes even deeper than that.

“We get to the root problem and probe,” said Opperman. “It might seem like a job loss was the reason for the hardship, but then you realize it’s [just the final straw],” she said.

From there, Opperman said the goal is to provide resources, like a comprehensive budget, to help the consumer achieve their financial goals. If the consumer has settled on declaring bankruptcy, the briefing includes a discussion of the terminology they can expect to hear through the process. The briefing can cost anywhere from $15 per household to $50 per person, depending on the provider you choose.

Another prefiling step is to find out which court you need to file in, based on your local district courts. Then, check with the local court to find out if there are any state-specific forms you need to complete. The last prefiling step is to review Form B2010, a required notice that explains the different types of bankruptcy you can file as well as the costs. For 2018, Chapter 7 had a total fee of $335 — not including lawyer fees.

Completing the initial petition

The initial steps for the initial filing include (when relevant) the following forms as well as any state-specified forms:

  • Form 101: Voluntary Petition for Individuals Filing for Bankruptcy
  • Form 121: Your Statement About Your Social Security Numbers
  • Form 119: Bankruptcy Petition Preparer’s Notice, Declaration and Signature
  • Form 2800: Disclosure of Compensation of Bankruptcy Petition Preparer

You may also need to include the following optional forms, when relevant:

  • Form 103A: Application for Individuals to Pay the Filing Fee in Installments
  • Form 103B: Application to Have the Chapter 7 Filing Fee Waived
  • Form 101A: Initial Statement About an Eviction Judgment Against You (individuals)
  • Form 101B: Statement About Payment of an Eviction Judgment Against You (individuals)

Finally, you’ll want to prepare a list or matrix of all your creditors, formatted the way your local court requires. Submit this along with the above forms and your certificate of credit counseling completion.

Within two weeks

The next and final set of forms must be submitted within the 14 days following your initial filing. These forms consist of:

  • Form 106Dec: Declaration About an Individual Debtor’s Schedules
  • Form 106Sum: A Summary of Your Assets and Liabilities and Certain Statistical Information (individuals)
  • Forms 106A-J: Schedules to 106 listing property, debtors, income, leases, income, expenses and more
  • Form 107: Your Statement of Financial Affairs for Individuals Filing for Bankruptcy (individuals)
  • Form 2030: Disclosure of Compensation of Attorney For Debtor
  • Form 108: Statement of Intention for Individuals Filing Under Chapter 7
  • Form 122A-1: Chapter 7 Statement of Your Current Monthly Income
  • Form 122A-2: Chapter 7 Means Test Calculation
  • Form 122A-1Sup (when relevant): Statement of Exemption from Presumption of Abuse Under §707(b)(2)

The court will also need a copy of all pay stubs and remittances you receive during the 60 days prior to your bankruptcy. Once again, check with your local court to see how they want these submitted and whether they go to the court of the bankruptcy trustee.

Finally, while not a necessity for filing, a requirement prior to discharge is a second financial education course. “The second course focuses on things like setting financial goals, budgeting, banking, borrowing, credit reports, credit scores, re-establishing credit, homeownership and different consumer laws,” said Opperman.

When filing Chapter 7, there is no requirement to have a lawyer, but because of the length of the forms and the number of them, it could be helpful to have one working with you. Especially since you may be able to offset the expense by getting bankruptcy filing fees waived with Form 103B. Either way, since most bankruptcy lawyers offer a free initial consultation, it’s a good idea to at least meet with one and get a sense of the process.

The means test

Chapter 7 has a reputation for being difficult to qualify for. This is mostly due to the more stringent eligibility standards put in place by BAPCPA in 2005. More directly, it’s because of the means test, a nine-page form that analyzes the filer’s expenses. But it’s not always the filer’s actual out-of-pocket expenses that are measured in this test. Instead, most of the expenses are based on the number of people in the household and the IRS-issued National and Local Standards for expenses like food, clothing, and utilities. In other words, what you actually spend on clothing and food will not be a factor.

Passing or failing the means test

When you pass the means test, it shows the court that your filing for Chapter 7 is not an abuse of the bankruptcy system because you can’t afford to restructure your debt under Chapter 13. But life has a way of throwing curveballs at us, which means that just because you fail the means test today doesn’t mean you will six months from now.

Failing the means test means that you’re a good candidate for Chapter 13, but this is only true if you can maintain payments of the Chapter 13 plan for the full three to five years. If you think this isn’t the case, possibly because an unusual bonus or remittance inflated your income before taking the means test, then you may want to wait and retake the test. Or, if you are willing to deal with a higher level of judicial involvement, you can file Chapter 7 even after failing the means test by listing out what you consider to be your special circumstances.

Pros and cons of declaring Chapter 7 bankruptcy

By far, one of the biggest positive aspects of declaring Chapter 7 bankruptcy is the ability to get eligible debts discharged without further payments. Chapter 7 is also much faster than other types of bankruptcy, in some cases taking as little as four months to discharge. (Chapter 13 can take years to get discharged.) Finally, the fact that collections activities stop once a bankruptcy is filed is a positive for many stressed-out debtors.

On the negative side, the impact on your credit score is probably the first thing that comes to mind. But when you’re facing the financial difficulties that make Chapter 7 a viable solution, it’s likely your credit score is already being impacted by late payments, collection notices, and repossessions, and would continue to be if you didn’t file.

One big negative for those who own nonexempt assets is the fact that they will be liquidated to pay creditors. Also, a potential negative is that your next tax refund may be considered part of the bankruptcy estate if it was from prefiling income.



  • Eligible debts are discharged without further payments
  • Faster than other types of bankruptcy
  • Collections activities stop once a bankruptcy is filed
  • Can be discharged in as little as 4 months
  • Has a negative impact on your credit score
  • Nonexempt assets will be liquidated to pay creditors
  • Tax refunds for income earned before filing are considered part of the bankruptcy estate

Alternatives to Chapter 7

For many, bankruptcy is a last resort to deal with out-of-control debt issues. But it’s not the only choice a consumer can make. They might also consider other debt management options such as:

  • Debt management plan: After getting the credit counseling briefing and financial education course required to file bankruptcy, you may learn financial management skills you didn’t have before. These skills can help you create a more efficient budget and may help you discover the ability to better manage your debt without needing to declare bankruptcy.
  • Debt consolidation loans: You may be able to undergo debt consolidation to take all your debt and transfer it to one payment at a reduced interest rate, making repayment somewhat easier to manage. If you have equity in your home, you might be able to take out an equity loan and create your own debt consolidation with lower interest than your creditors currently charge.
  • Lender negotiations: Some lenders may be willing to negotiate with you to lower interest rates and remove fees if you present them with a repayment plan. If you can make a lump sum payment, you may find that some creditors will even settle the total amount due for less. But note that the amount forgiven can be taxable.

When you decide to try to create your own plan for debt resolution, Opperman suggests still taking advantage of the help that an accredited, nonprofit credit counseling agency offers. “Yes, you can do it on your own, but most of us don’t repair our own cars or cut our own hair, so why try to handle this serious of an issue on your own,” said Opperman. “You can do a self-administered [debt management] plan, but at least start by getting some pro advice,” she said.

In some situations, a Chapter 13 bankruptcy might be a better solution than a Chapter 7 or a debt management plan. Especially when your income is high and you have nonexempt assets you want to protect, but your expenses are too high to manage debt repayment on your own.

After you declare bankruptcy, what comes next?

While you may be free and clear of certain debts after declaring Chapter 7 bankruptcy, you might still have remaining debts to manage like student loans, mortgage payments, and other non-dischargeable debts. It’s going to be vital that you create a plan that enables you to maintain those payments and not take on further debt, especially since you won’t be able to file Chapter 7 again for at least eight years.

As you may already have guessed, there will be some impact on your credit as a Chapter 7 bankruptcy will show on your credit report for up to 10 years. The good news is that the influence of this will lessen over time, so much so that we have research indicating that 75% of filers saw their credit rise to 640 after five years of filing — well before the bankruptcy had disappeared from their report.

Managing your credit is extremely important after filing bankruptcy because according to Opperman, things don’t always go as planned. “Often, after a bankruptcy, your credit report is a mess because creditors stop collections and debts get charged off,” she said. “By the time [filers] look at their credit report two years later, it still looks like they owe debts that were discharged,” said Opperman. To help with this, created “The Consumer Guide to Good Credit,” which guides consumers through the process of re-establishing good credit after bankruptcy.


While a bankruptcy filing can stop foreclosure actions, it won’t save your home if you’re behind on payments and it’s only a temporary solution. Instead, struggling homeowners who are facing foreclosure should consider filing Chapter 13, which allows them to catch up on past-due payments.

The main obstacle is the means test, which measures your income and expenses based on IRS-issued National and Local Standards for household expenses, such as utilities and food. If your current monthly income is less than the state median, or your aggregate five-year net income on the means test is less than $12,850, or 25% of your total unsecured debt (of $7,700 or more), then you may qualify.

Yes — assuming you are not behind in payments. A home is generally considered an exempt asset if you have no equity or it is under homestead exemption in your state, which means it’s not liquidated to pay creditors the way that a boat or vacation home might be.


Chapter 7 offers consumers a much-needed solution to the problem of overwhelming debt that can stem from a job loss, medical expense or other unexpected, life- and finance-altering event. While it is more difficult to qualify for Chapter 7 now than it was a decade ago, the hurdles in place are there to prevent abuse of the bankruptcy system, while still ensuring those who legitimately need Chapter 7 can still get access.

Moving forward after bankruptcy, consumers should make sure they extend their financial knowledge and exercise caution when taking on debt, to ensure they don’t end up needing bankruptcy again a few years down the road. The key to this, according to Opperman, is knowledge. “Financial knowledge is power when it comes to your money, and risk occurs when you don’t know what you’re doing with your money,” she said.

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Yolander Prinzel
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Yolander Prinzel is a writer at MagnifyMoney. You can email Yolander here


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Before you read on, click here to download our FREE guide to become debt free forever!

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Updated – March 20, 2019

Digging out of credit card debt can feel frustrating, intimidating and ultimately impossible. Fortunately, it doesn’t have to be any of those things if you learn how to take control.

Paying down debt is not only about finding the right financial tools, but also the right psychological ones. You need to understand why you racked up credit card debt in the first place. Perhaps it was a medical emergency or a home repair that needed to be taken care of immediately. Maybe you’d already drained your emergency fund on one piece of bad luck when misfortune struck again. Or maybe you’re struggling with a compulsive shopping problem, so paying down debt will likely result in you accumulating more until the addiction is addressed.

You also need to understand what motivates you to succeed. Do you want to pay down your credit card debt in the absolute fastest amount of time possible that will save more money or do you want to take some little wins along the way to keep yourself motivated?

Here’s a couple strategies consider as you learn the best way to handle credit card debt — and pay it off quickly.

2 common credit card debt repayment strategies

These repayment strategies can help you pay off credit card debt quickly. Keep in mind, you can use these strategies even for non-credit-card debt:

  • Debt avalanche: Focus on paying off the credit card with the highest interest rate first. Then, work your way down. This strategy can save you money on interest and get you out of debt sooner.
  • Debt snowball: Pay off your smallest debts first. Doing so can motivate you to continue making payments as you climb out of debt.

You don’t necessarily need to pick the repayment strategy that gets you out of debt the fastest. After all, if your repayment strategy doesn’t keep you motivated, you may not stick to it.

Using a personal loan or balance transfer credit card

As you seek to repay your debt, you could consider a personal loan or balance transfer credit card with a lower interest rate than on your existing debt. Transferring your debt to one of these financial products could help you reduce long-term interest costs.

But you’ll first need to learn whether or not you’re eligible. Your credit score will play a big role in determining your eligibility for a personal loan or balance transfer card. Use our widget below to figure out if a personal loan or a balance transfer is the best option for you!

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If you have a credit score above 640, you have a good chance of qualifying for a personal loan at a much lower interest rate than your credit card debt. With new internet-only personal loan companies, you can shop for loans without hurting your score. In just a few minutes, with a simple online form, you can get matched with multiple lenders. People with excellent credit can see APRs below 10%. But even if your credit isn’t perfect, you might be able to find a good loan to fit your needs.

Not sure what your credit score is? Click here to learn how and where to find out. If you know your credit score needs some work but not sure of what can be done, click here.

If you have a score above 700, you could also qualify for 0% balance transfer offers. We will talk more about balance transfers below but this option is the best way to pay off credit card debt if you’re able to qualify for a 0% APR balance transfer credit card.

A credit score of less than 600 will make it difficult for you to qualify for either option. If you have a credit score less than 640, struggling to make monthly debt payments and would like to explore your options to reduce your debt by up to 50%, then please click our option below to customize a personal debt relief plan.

Custom Debt Relief Plan

Now let’s talk about the financial tools to add to your debt repayment strategy in order to dig out of the hole.

Let’s say you have $10,000 in credit card debt, and are stuck paying 18% interest on it.

You already know that putting as much spare cash as you can toward paying down your debt is the most important thing to do. But once you’ve done that, so what’s next?

Use your good credit to make banks compete and cut your rates

You could save $1,800 a year in interest and lower your monthly payments based on several of the rates available today. That means you could pay it off almost 20% faster.

Here’s how it works.

Option One: Use a Balance Transfer (or Multiple Balance Transfers)

If you trust yourself to open a new credit card but not spend on it, consider a balance transfer. You may be able to cut your rate with a long 0% intro APR. You need to have a good credit score, and you might not get approved for the full amount that you want to transfer.

Your own bank might not give you a lower rate (or only drop it by a few percent), but there are lots of competing banks that may want to steal the business and give you a better rate.

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MagnifyMoney regularly surveys the market to find the best balance transfer credit cards. If you would like to see what other options exist, beyond Chase and Discover, you can start there.

promo-balancetransfer-halfIt also has tips to make sure you do a balance transfer safely. If you follow them you’ll save thousands on your debt by remaining disciplined.

You might be scared of a balance transfer, but there is no faster way to cut your interest payments than taking advantage of the best 0% or low interest deals banks are offering.

Thanks to recent laws, balance transfers aren’t as sneaky as they used to be, and friendlier for helping you cut your debt.

Sometimes the first bank you deal with won’t give you a big enough credit line to handle all your credit card debt. Maybe you’ll get a $5,000 credit line for a 0% deal, but have $10,000 in debt. That’s okay. In that case, apply for the next best balance transfer deal you see. MagnifyMoney’s list of deals makes it easy to sort them.

Banks are okay with you shopping around for more than one deal.

Option Two: Personal Loan

If you never want to see another credit card again, you should consider a personal loan. You can get prequalified at multiple lenders without hurting your credit score, and find the best deal to pay off your debt faster.

Personal loan interest rates are often about 10-20%, but can sometimes be as low as 5-6% if you have very good credit.

Moving from 18% interest on a credit card to 10% on a personal loan is a good deal for you. You’ll also get one set monthly payment, and pay off the whole thing in 3 to 5 years.

Sometimes this may mean a higher monthly payment than you’re used to, but you’re better off putting your cash toward a higher payment with a lower rate.

And you’ll get out of debt months or years faster by leaving more money to pay down the debt itself. If you want to shop for a personal loan, we recommend starting at LendingTree. With a single online form, dozens of lenders will compete for your business. Only a soft credit pull is completed, so your credit score will not be harmed. People with excellent scores can see low APRs (sometimes below 6%). And people with less than perfect scores still have a good chance of finding a lender to approve them.



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Brian Karimzad
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Brian Karimzad is a writer at MagnifyMoney. You can email Brian at

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College Students and Recent Grads, Pay Down My Debt

Sample Goodwill Letter to Remove a Late Student Loan Payment from Your Credit Report

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

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If you’ve pulled your credit report recently and discovered that there’s been a late payment reported on your student loans, you might be wondering what you can do to recover. Late payments can damage your credit, especially if you stop paying your loans for an extended period of time.

We’ve already gone over the repercussions of delinquency and default, but now let’s take a look at another method of repairing your credit report — sending a goodwill letter to your creditor.

What is a goodwill letter?

A “goodwill letter” is a simple way to repair your credit report, and it can be used for both federal and private loans. The purpose of a goodwill letter is to restore your credit to good standing by having a lender or servicer erase a lateness on your credit report.

Typically, those who have experienced financial hardship due to unexpected circumstances have the most success with goodwill letters. They allow you to ask if your student loan servicer can empathize with the situation that caused the lateness and erase it from your report.

It can also be used when you think the late payment is an error — for example, if you were in deferment or forbearance during the time of the late payment and weren’t required to make any payments, or if you know you’ve never been late on a payment before.

What makes a convincing goodwill letter?

If you’ve been looking for a goodwill letter that will work well, we have some tips on what you should include in your letter:

1. An appreciative tone

It’s important that the entire tone of your letter comes off as thankful and conscientious. If you were actually late on your payments due to extenuating circumstances, taking an angry tone probably won’t help your case.

2. Take responsibility

You want to be convincing and honest. Take responsibility for the late payment, and explain why it happened. They need to sympathize with you. Saying you just forgot isn’t going to win you any points.

3. A good recent payment history

Besides sympathy, you want to gain their trust that you will continue to make payments. If your lender sees payments being made on time before and after the period of financial hardship, it might be more willing to give you a break. When you have a pattern of late payments, on the other hand, it’s more difficult to convince them that you’re taking this seriously.

4. Proof of any errors and relevant documents

If you’re writing about a mistake that occurred, still be friendly in tone, but back up the errors with documentation. You’ll need proof that what you’re saying is true. Unfortunately, errors are often made on credit reports, and it may have been a clerical error on behalf of your servicer. If you have any written correspondence with them, you’ll want to include it.

5. Simple and to the point

The last thing to keep in mind is to craft a short and simple letter. Get straight to the point while telling your story. The people reviewing your letter don’t want to read an essay, and the easier you make their lives, the better.

Sample goodwill letter No. 1

Below is a sample goodwill letter for student loans to give you an idea of how to structure your own:

To whom It may concern:

Thank you for taking the time out of your day to read this letter. I just pulled my credit report, and discovered that a late payment was reported on [date] for my account [loan account number].

During that time, my mother fell terminally ill, and I was the only one left to care for her. As such, I had to leave my job, and my savings went toward her health care expenses. I fell on very rough times after she passed away, and was unable to make my student loan payments.

I realize I made a mistake in falling behind, but up until that point, my payment history with you had been spotless. When I was able to gain employment once again, I quickly resumed paying my student loans, making them a priority.

I’m not proud of this black mark on my record, but it’s the only one I have, and I would be extremely grateful if you could honor this request to remove the lateness from my credit report. It would help me immensely in securing other lines of credit so that I can further improve my credit score.

If the lateness cannot be removed entirely, I would still be appreciative if you could make a goodwill adjustment.

Thank you.

Sample goodwill letter No. 2

If you’re writing a letter because the lateness on your credit report is inaccurate, then try something similar to this:

To whom it may concern:

Thank you for taking the time to read this letter. I recently pulled my credit report and found that [Loan servicer] reported a late payment regarding my account [loan account number].

I am requesting that this late payment be assessed for accuracy.

I believe this reporting is incorrect because [list the supporting facts you have]. I have included the documentation to prove that [I made payments during this time / that my loans were in forbearance/deferment and didn’t require any payments].

Please investigate this matter, and if it is found to be inaccurate, remove the lateness from my credit report.

Thank you.

Make sure you provide as many personal details as possible — without making the letter too long, of course. You should also include your name, address and phone number at the top of the letter in case your loan servicer needs to reach you immediately.

Where to send your goodwill letter

Now that your letter is written, it’s time to send it. This can be done either by fax or by mail. Most student loan servicers have their contact information on their website, but you can also look on your billing statements to see if they specify a different address.

Additionally, you can try calling the credit bureau where the lateness was reported to see if they can give you the contact information you need.

It’s important to mention that goodwill letters are not a means to immediate success. Unfortunately, it often takes several attempts to correspond with servicers and lenders to get them to acknowledge that they received a letter from you.

Your best bet is to get a personal contact at the company who has the power to erase the late payment from your credit report.

If all else fails, try as many different communication methods as possible. Phone, mail, fax, live chat (if your servicer offers it) and email them. Several people who have tried this report that it’s possible to wear your servicer down with a decent amount of requests.

Addresses and fax numbers to try

Here are some addresses and fax numbers for several of the larger servicers, as listed on their websites. Again, it may also be worth phoning your servicer to get the name of someone there that can help you. If you have federal student loans, you can also check this Federal Student Aid page for more contact information.


Documents related to deferment, forbearance, repayment plans or enrollment status changes:

Attn: Enrollment Processing

P.O. Box 82565

Lincoln, NE 68501-2565

Fax: 877-402-5816

Great Lakes

Great Lakes

P.O. Box 7860

Madison, WI 53707-7860

Fax: 800-375-5288

Sallie Mae

Sallie Mae

P.O. Box 3229

Wilmington DE 19804-0229

Fax: 855-756-0011


For anything other than federal loans, check here

Navient – U.S. Department of Education Loan Servicing

P.O. Box 9635

Wilkes-Barre, PA 18773-9635

Fax: 866-266-0178


P.O. Box 145122

Salt Lake City, UT


Fax: 801-366-8400


For letters and correspondence

FedLoan Servicing

P.O. Box 69184

Harrisburg, PA 17106-9184

Fax: 717-720-1628


For FFELP and private loans, check here

Edfinancial Services

P.O. Box 36008

Knoxville, TN 37930-6008

Fax: 800-887-6130

Documents to include with your goodwill letter

Don’t let your efforts go to waste by forgetting to send documentation with your letter. Here’s a quick checklist of what you should include:

  • The account number for your loan
  • Your name, address, phone number and email
  • Statements showing proof that you paid (if you’re disputing a late payment)
  • Documentation showing that you’ve paid on time at all other points aside from when you experienced financial hardship (if that’s the case)
  • Identifying documentation so your servicer knows you sent the request

Also note that if you’re mailing anything, you should send it by certified mail with a receipt requested. This way you’ll know whether your letter made it to the servicer.

What to expect after submitting your goodwill letter

Once you submit your goodwill letter, you should hear back from your creditor with a decision in a few weeks. If two to three weeks have passed without word, follow up via email or phone call.

As you know, there’s no guarantee that your goodwill letter will work. The decision to remove a negative mark from your credit report is entirely in the hands of your creditor.

If your creditor rejects your petition, you’ll have to accept the ding on your credit report and take other steps to boost your credit. But if they agree to repair your credit, you should see the delinquency removed from your report and your credit score increase as a result.

A higher credit score can make life a lot easier, whether you want to take out a loan, open a credit card or, in some cases, even rent an apartment. For student loan borrowers, a strong credit score also opens the door to student loan refinancing, a savvy strategy that lets you restructure your debt, possibly changing your monthly payment and potentially saving money on interest.

If your credit score rebounds and you want to take proactive steps to conquer your student debt, refinancing could be the answer you’ve been looking for, so long as you no longer need the protections that come with federal loans.

Either way, though, make sure to keep up with student loan payments so you don’t end up with a delinquent account dragging down your newly repaired credit score.


If you’re interested in exploring goodwill letters further — and the results that others have had — check out these websites:

  • They cover disputes, what to do about them and how to go about rectifying them here.
  • If you have loans with a private lender, and your lender had reported you as late when you weren’t, you can file a complaint with the Consumer Financial Protection Bureau (CFPB) to see if they can help you.
  • myFico Forums: The forums on myFico are populated with helpful individuals that might be able to give you contact information for certain servicers. There are some people reporting success with goodwill letters, and they may be willing to share their letters with others upon request.

It’s worth the time to write a goodwill letter

If you’ve discovered that a late payment has been reported on your credit, and it’s because you fell on hard times or is inaccurate, it’s worth trying to get it erased. These dings on your credit are there to stay for seven to 10 years. That’s a long time, especially if you’re young and hoping to buy a house or a car in the near future. It’s a battle worth fighting.

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Rebecca Safier
Rebecca Safier |

Rebecca Safier is a writer at MagnifyMoney. You can email Rebecca here

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