Bankruptcy Law, student loan debt, Student Loans

Bankruptcy: Finally An Option for Student Loan Debt?

Student loan debt is at an all-time high with 44 million Americans carrying outstanding amounts of the debt. It is currently estimated that $1.5 trillion is owed in student loan debt. With that many people graduating with student loans, it should come as no surprise that many of these borrowers eventually default.

Approximately 11 percent of student loan borrowers have defaulted or were delinquent on their loans by the end of 2018. For the most part, consumer debt, including credit card and medical debt, can be discharged in a bankruptcy case. Only a very select list of debt is not allowed to be discharged at the end of a bankruptcy case, including child support, alimony, criminal fines and certain overdue tax debt.

Student loan debt has not been barred from discharge, but the current legal standard requiring the filer to prove an undue hardship has proved to be extremely difficult. The undue hardship has never been applied consistently amongst bankruptcy courts, and Congress has never given one set standard for courts to apply.

For most borrowers, bankruptcy has never been an option for getting out from under the burden of this type debt. However, that fact may soon change with legislation that has recently been proposed.

The legislation was introduced by Democratic Senator Dick Durbin and named the Student Borrower Bankruptcy Relief Act of 2019. It was introduced on May 9 and has bipartisan support, including cosponsors, Sen. Elizabeth Warren (D-MA), Rep. Jerrod Nadler (D-NY), and Rep. John Katko (R-NY). The purpose of the proposed legislation is to have private and federal student loan debt treated like any other type of consumer debt in bankruptcy, allowing it to be discharged at the end of a bankruptcy case.

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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. There are ways to file for bankruptcy with student loan 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 McMaken 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 McMaken website at