A report by the Department of Education has identified solutions it believes will lead to better outcomes for those struggling with student loan debt. The biggest relief being extended to borrowers is the ability to discharge private student loans in bankruptcy. The Obama administration’s proposal will also extend enhanced borrower protections found in federal loans to private loans.
It seems the Department of Education is ready to strike a balance between collecting on their loans and removing unreasonable hardships on struggling borrowers. “Other types of consumer debt – mortgages, credit cards and auto loans – are dischargeable in bankruptcy, and student loans shouldn’t be an exception,” said Under Secretary of Education, Ted Mitchell.
“We feel strongly that while there are protections built into the (Federal) Direct Loan program that are important for borrowers, there aren’t parallel protections for borrowers in the private student loan market,” Mitchell said. “We think it’s important to do what we can to create those protections, and we think starting with a (new) bankruptcy provision is the way to go.”
The Department of Education is also reconsidering what constitutes as “undue hardship,” which could also affect Federal student loans. Currently, undue hardship is the only out for borrowers trying to get their student loans discharged in bankruptcy. Earlier this year, the Obama administration indicated that it would broaden the definition to increase the likelihood of more discharges.
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For borrowers who are struggling with student loan debt, relief options are available. Many student loan borrowers are unaware that they have rights and repayment options available to them, such as postponement of loan payments, reduction of payments or even a complete discharge of the debt. It is important you 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.