Debt and Higher Education

December 12, 2010 (Press-News.org) For decades, government sponsored student loans have helped pave the way for millions to get a college education. Following graduation, the loans are repaid over a period of time, and usually with relatively little difficulty. But as tuition has increased in recent years to never-before-seen levels, and interest rates followed with it, and the economy tanked, many former students are finding it impossible to repay their loans. Many graduates have turned to bankruptcy to eliminate credit card balances and other types of debt, but these same graduates cannot expect to wash away their student loans in bankruptcy.

Graduates with overwhelming student loan payments are in for a rude awakening: Student loans cannot be discharged in bankruptcy. The law as it was changed in 2005 affects the repayment of private and federal student loans.

For many jobless graduates with lower than expected income--or none at all--the heavy debt load from student loan obligations has played havoc with their lives, leaving many to try to scrape by and pay loans that in many cases resemble monthly home mortgage payments. Under the current law there are situations where someone can claim a hardship in a bankruptcy proceeding and have their loans discharged, but that's a long shot.

The petitioner must show proof of undue hardship and file a separate petition. The court will review the circumstances and in some cases, if a person can prove he or she either doesn't have or expect to have the income to repay the loans, the loans could be discharged.

If you're drowning in debt and overwhelmed by student loans, consult with a bankruptcy attorney to see whether bankruptcy is a viable option for you. Student loans may be difficult or next to impossible to eliminate in bankruptcy, but that doesn't mean there aren't ways for you to get debt relief.

Article provided by Joseph C. McDaniel, P.C.
Visit us at www.josephmcdaniel.com