Those struggling with student loan debt often do not see a way out. The stress of monthly payments is causing more graduates to put off things like marriage and buying a home. However, a new trend is helping alleviate the pressure: filing for bankruptcy.
Since March there have been a number of bankruptcy courts that have allowed borrowers to discharge their private student debt thanks to the vague wording in the definition of a student loan.
Bankruptcy law states that a borrower cannot discharge a loan that was for an educational benefit without proving “extreme hardship.” An increasing amount of students are arguing that their loans fall outside of this debt category because they attended a college that was not accredited or used loans that were taken out for the purposes of studying for a test like the bar exam.
This is an argument borrowers would not be expected to win, but in recent cases some judges have agreed with the borrower.
An example of this is a 37-year-old woman who filed for bankruptcy in 2014 and was able to discharge the unpaid portion of a $15,000 Citibank loan she needed to study for the bar exam. U.S. Bankruptcy Court Judge Carla Craig ruled that loan debt for bar exams is comparable to consumer debt and does not fall into the category of student loans that remains with a borrower even after bankruptcy.
Click here to read more on this story.
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 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.
