The President has been considering ways to allow certain student debts to be expunged through the bankruptcy process. A prominent news source has reported that the White House is evaluating the steps to discharge student loan debt. They are hoping that there can be a shift in bankruptcy laws concerning student loan debt so that it follows the same rules and regulations as mortgage and credit-card debt.
Ninety percent of student loans are created by the federal government, whereas the remaining loans are held by private lenders. Unfortunately, student debt has doubled in just the past five years, and a majority of borrowers are behind on making payments. Some amount of the borrowers are graduate students who make a livable income; however, many are students and parents who survive on a very limited amount of income.
President Obama has advised his administration to begin considering how to allow all student loan borrowers to be able to use bankruptcy proceedings to discharge their student debt. Currently, federal law does not generally allow either U.S. government student loans or private loans to be discharged in bankruptcy proceedings. However, auto loans, credit-card debts, and home mortgages are allowed to be wiped out in bankruptcy proceedings. This disparity has resulted in many individuals facing serious financial troubles that can affect them for the rest of their lives, all because of their decision to better themselves by going back to school.
A very low number of people attempt to discharge their student loan debt every year, and this is likely due to the uncertainty and expense of the process. As it stands today, students need to establish undue hardship to even have the courts consider discharging their debt, regardless of how many years of payments they have made.
Discharging Debt to Take Control of Financial Situation
Bankruptcy can be an effective tool to allow individuals to get out of debt and begin rebuilding their lives. Many people do not know what types of debts can be discharged and what the implications of a bankruptcy are. Some common debts that people attempt to discharge are credit-card debt, mortgages, and past taxes. However, as the above section discusses, the government has begun discussing expanding the types of debts that can be discharged. Student loans are one of the most prevalent types of debt, and the ability to discharge these loans may greatly affect society. If you are struggling to make your student loan payments, it is important that you contact an attorney to determine if bankruptcy is a good choice for you.
An Attorney Can Assist You in Your Bankruptcy Proceedings
If you are in Kentucky or Southern Indiana and you would like assistance in getting out of debt, you should contact an experienced and dedicated bankruptcy law attorney at the Schwartz Bankruptcy Law Center. Our attorneys have many years of experience handling these types of matters and can assist you in presenting and preparing your case. As you may imagine, these types of cases can be extremely complicated and emotionally draining; having a diligent attorney can make the process exponentially easier. Contact the Schwartz Bankruptcy Law Center at 502-485-9200 if you are in Kentucky and 812-945-9200 if you are in Indiana to schedule your free initial consultation.
More Blog Posts:
Recent Case Discusses Student Loan Debt Discharge During Bankruptcy Filings, Kentucky Bankruptcy Lawyers Blog, published November 16, 2014.
Recently Released Analysis from Federal Reserve Research and Statistics Group Demonstrates The Pitfalls of Not Filing for Bankruptcy, Kentucky Bankruptcy Lawyers Blog, published March 14, 2015.