As we have reported in previous blogs, people who are struggling to pay back student loans do not have very many options, as they are extremely hard to discharge through bankruptcy.
However, this does not mean that people should avoid a Chapter 7 or Chapter 13 bankruptcy, as both allow borrowers to eliminate other forms of debt, which may make paying student loans easier. For example, a Chapter 7 bankruptcy allows for the discharge of unsecured debt, like medical bills and credit card debt.
Additionally, a Chapter 13 bankruptcy allows a debtor to enter into a repayment plan with creditors, perhaps lowering his or her monthly payments on student loans.
Bankruptcy is an option for student loan borrowers, in addition to income based repayments and deferment. It should also be noted that filing for bankruptcy creates an automatic stay, which ends collection attempts.
Sadly, millions of Americans are struggling to repay student loans and are being harassed by lenders.
The Washington Post reported recently that a study by the Consumer Financial Protection Bureau focusing on private student loans found that there were more than 5,300 complaints filed in the 12 months ending in September 2014 over lending tactics. Many of the complaints had to do with lenders not giving consumers enough options for paying back loans.
“We are hearing from consumers that they are driven into default because private student loan companies are not providing concrete loan modification options,” CFPB Director Richard Cordray said in a statement, according to the Post.
Should I Talk to a Bankruptcy Attorney About My Student Loans?
It is unfortunate that so many Americans are struggling with student loans, and are being driven into default because of the lack of options available. It is our hope that the federal government will do something to address this issue, including loosening bankruptcy laws to allow for the easier discharge of these debts.
If your student loan situation is causing you tremendous stress, contact our Washington DC and Maryland bankruptcy lawyer today for a consultation. You can also visit our Facebook page, our LinkedIn page, our Google+ page or our Twitter page.
Perhaps a bankruptcy, allowing you to eliminate other forms of debt, may be a good option.
Law Firm of Kevin D. Judd – Maryland and Washington DC bankruptcy attorney
Judd’s Judgment: Currently, more than 7 million Americans have student loans in default.