Discharging student loan debt in a bankruptcy case has been an almost impossible feat for most filers. That is, unless they are able to meet the undue hardship requirements. However, a new bill named the Student Borrower’s Relief Act of 2019 could potentially remove those roadblocks that have prevented borrowers from receiving relief in the past.
Bankruptcy offers the filer a fresh start where the individual can rid himself or herself of financial burdens that have been weighing him or her down for years. These debts normally include unsecured debt, including credit cards, personal loans or medical bills. However, if the bulk of the person’s debt is student loans, the filer would normally end up in the same situation even after the bankruptcy was over. While medical debt and credit card debt may have been discharged, the borrower would end up still carrying a large amount of debt. It is for this reason that many borrowers might avoid bankruptcy, seeing it as a no-win situation.
The current national student loan balance is approximately $1.5 trillion in outstanding loans. According to data from Upsolve and LendEDU, around one-third of all bankruptcy filers carry some form of student loan debt. LendEDU reviewed 1,083 bankruptcy cases, and 32 percent of them involved student loan debt, meaning 32 percent of consumers attempted to get their debts discharged walked away still owing on their student loans.
Of those 32 percent of bankruptcy filers surveyed, their student loan debt was almost half of their total debt on average. Why this is so concerning is it means that these filers ended up closing their bankruptcy cases with half of the debt they originally started with when the case began, unless they were able to successfully meet the requirements of the undue hardship test required when discharging student loan debt. These student loan bills can constitute a large portion of the total monthly expenses the borrower may have.
The Student Borrower’s Relief Act could potentially change this fact for filers seeking relief from insurmountable student loan debt. By eliminating the portion of the federal bankruptcy code that makes it so difficult to discharge student loan debt, more consumers will feel confident to use the bankruptcy system to find this fresh financial start they are so desperately in need of.
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 www.miamibankruptcy.com.
Source: The Business Insider