According to a recent study published by the National Association of Consumer Bankruptcy Attorneys (NACBA), four out of five U.S. bankruptcy attorneys reported a major jump in student loan borrowers seeking debt relief. The same experts that were among the first to warn of the mortgage crisis are now warning of a ‘student loan debt bomb.’ Student loan debt is now topping U.S. credit card debt with few options available for distressed borrowers. Even parents who co-signed loans for their children are not exempt from this trend. They are facing the loss of nest eggs, retirement homes and other assets as a result of insurmountable student loan debt.
Below are the findings from the NACBA nationwide survey of 860 bankruptcy attorneys:
• More than four out of five bankruptcy attorneys (81 percent) say that potential clients with student loan debt have increased “significantly” or “somewhat” in the last three-four years.
• 39 percent of bankruptcy attorneys have seen potential student loan client cases increase from 25 to 50 percent in the last three-four years. 23 percent of bankruptcy attorneys have seen such cases jump by 50 percent to more than 100 percent.
• 95 percent of bankruptcy attorneys report that few student loan debtors are seen as having any chance of obtaining a discharge as a result of undue hardship.
• College seniors who graduated with student loans in 2010 owed an average of $25,250, up five percent from the previous year.
• Borrowing has significantly increased for those in the 35-49 age group, with school debt increasing by 47 percent.
• Loans to parents for the college education of children have jumped 75 percent since the 2005-2006 academic years. Parents have an average of $34,000 in student loans and that figure rises to about $50,000 over a standard 10-year loan repayment period.
• An estimated 17 percent of parents whose children graduated in 2010 took out loans, up from 5.6 percent in 1992-1993.
• Of the Class of 2005 borrowers who began repayments the year they graduated, one analysis found 25 percent became delinquent at some point and 15 percent defaulted. The Chronicle of Education puts the default rate on government loans at 20 percent.
If you are in a financial crisis and are considering filing bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade & Garcia, P.A. has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade & Garcia website at www.miamibankruptcy.com.