A recent poll by the American Bankruptcy Institute (ABI) showed that most people “agreed strongly” that federal laws should be amended to allow private student loans to be discharged in bankruptcy.
According to the ABI, 69 percent of people who responded to its poll thought that the Bankruptcy Code should be amended to allow people to discharge student loans. Only 30 percent of those polled though that the Code should be left in its current state.
Currently, the only way a person can have student loans discharged through bankruptcy is by proving that the loans are an undue hardship, which is a very difficult standard to meet.
The ABI reports that student loan debt nationally now tops $1 billion—more than credit cards, car loans or any other type of consumer debt. Last year, nearly 15 percent of student loan borrows defaulted on their loans, when the average balance was $23,300.
In this economy, many college graduates are finding themselves without employment, while trying to grapple with housing payments, credit card bills and other forms of debts, on top of high student loan payments. It is unfortunate that so many people are struggling to make student loan payments and we hope Congress does do something to change the current laws regarding bankruptcy.
Although you may not be able to discharge student loan debts, you can still free up money for payments by filing for Chapter 7 or Chapter 13 bankruptcy and getting rid of credit card debt. Contact our Washington DC and Maryland bankruptcy lawyer now for a free consultation.