Student Loans May Lead to More Bankruptcy Filings
Here’s an interesting article regarding the student loan debt in this country which is causing many debtors to seek out experts in dealing with student loans in order to resolve their debt problems. Generally student loan debt is not dischargable by filing for bankruptcy unless a debtor can show that they essentially will not be able to work again in order to pay off their burdensome loans. If a debtor can work, then they can at least make some kind of payment toward the loans that they took out, at least that is how the courts see it.
Having an easier time discharging student loans may change some day, with the student loan debt getting higher and higher everyday. Some analysts think that at some point the student loan bubble will burst and have a similar affect on the economy as the housing crisis did. This means at some point the government may decide that student loans can be discharged through filing for bankruptcy regardless of whether a debtor has the ability to work or not. As a person who has heard many stories of those struggling to pay off their student loans, I have had to turn away several people who have asked for help with their student loans. Debtors should know that even though they can’t get rid of their student loans entirely at this time, there may be a way to reduce their payments. One such government program is Income Based Repayment (IBR). IBR bases your payments on the amount of income you received the previous year and allows for debtors in the program to discharge their loans after 10 years (if in a public interest job) or 25 years if in another job. The IBR Program may only be available for loans associated with Federal debt, which means private lenders may still cause a borrower problems.
If one thing is for certain, former students are going to continue to struggle to make their payments moving forward. The Wall Street Journal recently estimated that 43% of student loan borrowers are not making their payments. If this trend continues with no relief, the economy will suffer overall as student loan borrowers will not be able to afford home or vehicle purchase and will struggle to meet their daily living needs. Student loan reform is needed now in order to preserve our economy from crashing in the future.
If you have additional regarding student loans and bankruptcy, feel free to contact Symmes Law Group for a free consultation by calling 206-682-7975