student loan debt

Student Loan Bankruptcy: A Solution to the Student Loan Debt Crisis

With an estimated $1.6 trillion owed in student loan debt nationwide, it comes as no surprise that solving the student loan crisis has been at the forefront of most political campaigns in 2020. However, many argue that the solution to the problem is much simpler than just forgiving student loan debt. In fact, the answer to solving the student loan crisis could lie in the United States Bankruptcy Code.  

Traditionally, student loans have been all but impossible to discharge in either a Chapter 7 or Chapter 13 bankruptcy case. Since the creation of the Higher Education Act in 1965, Congress has continued to add rules that make discharging federal student loan debt more and more difficult in bankruptcy. In 2005, private student loans were added to the list of debts that were difficult to discharge in bankruptcy, regardless of how much the filer was struggling financially. 

student loan debt, Student Loans

Facing a Broken Student Loan System Borrowers Set Hopes on New Reform Bill

The student loan system has been considered broken for quite some time, and while many reform efforts have been made to help improve the process, nothing has been successful thus far. However, a new student loan reform bill could signal meaningful change is on the way.

This reform bill focuses on how student loan debt is handled in bankruptcy. Traditionally, student loans are non-dischargeable in a personal bankruptcy case, unless a specific set of criteria are met. The “Consumer Bankruptcy Reform Act of 2020,” proposed by House Judiciary Committee Chairman Jerry Nadler (D-NY) and Senator Elizabeth Warren (D-MA) proposes a way to make this process easier, allowing more student loans to be discharged through personal bankruptcy. The bill addresses both Chapter 7 and Chapter 13 bankruptcy cases and proposes changing the current systems under each chapter by one system, entitled Chapter 10.  

student loan debt, Student Loans

Baby Boomers and Higher-Income Earners Carry Largest Amount of Student Loan Debt

Student loan debt affects more than 44 million Americans, a collective $1.67 trillion in outstanding student loans.  Members of the Baby Boomer generation owe the largest portion of student loan debt, as well as borrowers who earn higher incomes. 

According to a recent study by Fidelity, that surveyed 250,000 outstanding student loans, Baby Boomers owed 33 percent (33%) more debt in 2020 than they did in 2019. The biggest reason for this increase has to do with the number of Baby Boomers who took out Parent Plus loans to help their children and grandchildren attend college.  

student loan debt, Student Loans

Bankruptcy Court Discharges $200,000 in Private Student Loan Debt for Colorado Couple

A major victory was scored for student loan borrowers after a U.S. Court of Appeals for the Tenth Circuit issued a ruling stating that a Colorado couple’s private student loan debt could be discharged in their personal bankruptcy case. The ruling allowed $200,000 of private student loan debt to be wiped out, breaking the long-standing stigma that student loan debt, particularly private student loan debt, is near impossible to discharge in a bankruptcy case.

The Colorado couple had taken out $200,000 in private student loans from Navient, one of the nation’s largest student loan issuers. The ruling comes after a similar bankruptcy case, where the borrower also had their student loan debt discharged. In that case, the loan servicer appealed the ruling.

Coronavirus, COVID-19, Debt Relief, student loan debt

New Legislation Provides Student Loan Forgiveness to Frontline Healthcare Workers

Healthcare workers on the frontlines are putting their lives at risk every day during the coronavirus (COVID-19) pandemic, which has many asking what can be done to financially help these dedicated individuals.

Rep. Carolyn Maloney (D-NY) plans to introduce new legislation that will do just that by forgiving outstanding student loan debt carried by these frontline healthcare workers. The legislation is titled The Student Debt Forgiveness for Frontline Health Care Workers Act. The hope behind this new legislation is that by forgiving student loan debt for these workers, a large financial burden will be lifted. Additionally, this incentive could possibly drive others to join the healthcare industry and continue the fight against COVID-19.

student loan debt

Court Ruling in Favor of Discharging Student Loan Debt Gives Borrowers Hope

Student loan forgiveness form on a desk.

When it comes to discharging debts in a bankruptcy case, student loan debt has traditionally been one of the most difficult debts to discharge. But a New York court ruling issued on January 7, 2020, has given student loan borrowers hope that change is near.

A New York judge ruled last week that the $221,385.49 in student loan debt that U.S. Navy veteran Kevin Rosenberg owed for six years was considered a dischargeable debt in his Chapter 7 bankruptcy case.

student loan debt, Student Loans

The Presidential Candidates Campaign Proposals for Student Loan Debt

One of the major issues at the center of the 2020 Presidential Election is student loan debt, an issue that affects 44 million American borrowers. Each of the Democratic presidential candidates have his or her own proposal on how to handle this massive issue that seems to be growing every year. Some of these plans would reduce the outstanding balances borrowers hold while others call for a complete elimination of the debt.

It is said that student loan balances have surpassed credit card debt and auto debt. The average undergraduate college graduate leaves school with at least $30,000 in student loan debt, which is triple what graduates had in the 1990s. Every day, 3,000 borrowers go into default on their student loans, which is why all the candidates are calling for some level of reform.

student loan debt, Student Loans

Be on the Look-Out for These Student Loan Scams

More than 40 million borrowers are carrying an estimated $1.5 trillion in student loan debt. With that many individuals carrying student loan debt, it should come as no surprise that many scams are out there, hoping to take advantage of borrowers who are desperate to get out of debt quickly. Borrowers need to be aware of these debt relief scams in particular, which are now facing investigation by the Federal Trade Commission (FTC).

Student Loan Debt Elimination Scams

Many companies are out there offering the promise of eliminating student loan debt for borrowers who are desperate for a way out. However, if someone is offering a deal that sounds too good to be true, that is usually because it is, in fact, too good to be true. Many companies will promise to wipe away a person’s loans when they have no actual ability to do so. The fact of the matter is no one can promise student loan forgiveness or cancellation. Student loan borrowers can only ever receive forgiveness if they meet very specific conditions, and the fastest any borrower can receive loan forgiveness is five years. Even these forgiveness programs can be very difficult in terms of qualifications.

If the borrower has federal student loans, it should be noted that no student loan debt relief company can negotiate directly with the federal government to obtain lower rates on those loans. If a company promises the ability to negotiate a lower payment, this can normally only be done via an income-drive repayment plan, but most of these can be applied for directly by the borrower, not a third-party entity.

student loan debt

A Growing Number of Bankruptcy Filings Are Being Driven by Student Loan Debt

Student loan debt is playing a large part in many recent bankruptcy filings, according to a recent study from LendEDU. According to their data, 32 percent of people filing for Chapter 7 bankruptcy report having some amount of student loan debt, showing that student loan debt is definitely a growing concern when it comes to consumers considering filing for bankruptcy.

LendEDU reported that, of this 32 percent of total consumers, student loan debt made up almost half of their total average debt. The student loan debt crisis is said to be reaching an all-time high with the total national amount exceeding $1.5 trillion.

According to the Student Loan Hero, the average undergraduate student leaves with $29,800 in student loan debt. This figure does not even begin to consider those students who must take out more loans to pay for necessary expenses or other students who continue with graduate studies. Many of these students end up carrying six figures of student loan debt after graduation.

The data reported by LendEDU only covers filers who are pursuing a Chapter 7 bankruptcy and not a Chapter 13 bankruptcy, which is an option that offers a restructuring of debt over the course of three to five years.

This LendEDU study points to an even bigger problem involving the burden student loan debt places on young consumers. Many of them struggle with keeping up with basic living expenses, on top of their student loan obligations, which makes it very easy for them to fall behind in payments. Eventually, many of these borrowers feel they have no other choice but to declare bankruptcy to pay them off. The bankruptcy may not end up discharging their loans, but it will erase other debt that makes it hard for them to continue paying their obligations. Student loans are normally non-dischargeable in bankruptcy cases, which is a large part of the problem.

Taking these facts into consideration, this would mean that if the people surveyed by LendEDU who fall in the 32 percent carrying student loan debt, they will only receive partial relief through the average bankruptcy case. If 49 percent of their debt is still considered non-dischargeable, that is still a large sum to continue paying following a bankruptcy discharge.

Borrowers must prove that paying their loans  would be an undue financial burden, a legal standard which has traditionally been very difficult to meet. Movement is being made towards possibly fixing this issue by allowing student loan debt to be treated just like any other unsecured debt in a bankruptcy case.

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



Bankruptcy Law, Debt Relief, Student Loans, Timothy Kingcade Posts

Possible Changes Ahead for Student Loan Debt in Bankruptcy

Student loans have traditionally been very difficult for borrowers to discharge in bankruptcy, but this fact may soon change with legislation proposed this week in the U.S. Senate. Lawmakers have introduced a bill that would make it easier for student loan borrowers to cancel their debt in bankruptcy. The measure has been titled the “Student Borrower Bankruptcy Relief Act of 2019” and has the support of 14 Democrats, one Republican, and one Independent Senator.

This legislation marks the first time that the Senate has proposed giving student borrowers the ability to discharge their federal student loans.

The average student will end up taking out $33,310 in 2018 to attend college, according to data from the Institute for College Access & Success. The total amount of student loan debt in the country is approximately $1.5 trillion. It is estimated that the country’s student loan balance will reach $2 trillion by 2022. Financial experts believe that a significant portion of the total debt will never end up being repaid. In fact, more than one-fourth of all student loan borrowers are either in delinquency on their student loan debts or are in default.

For people carrying federal or private student loans, their debts can only be discharged in a bankruptcy case if they can prove that the loans pose an undue hardship. However, no definite test has ever been given on what qualifies as an undue hardship, leaving it as a matter of interpretation for the bankruptcy judge to decide.

Student loan advocates have called for Congress to force the U.S. Department of Education to establish clear rules on when student loan debt can be discharged in bankruptcy. Many argue that the interpretation of what is an undue hardship depends on that specific judge’s interpretation of the law, which can be very unfair to the borrower if the judge hearing his or her case happens to be tough on discharging certain debts.

By making it easier to discharge student loan debt in bankruptcy, it is a distinct possibility that lenders will be more willing to work with a borrower who is struggling to pay on his or her loans. If the borrower is not able to work out a payment plan with the lender, he or she should then have the option to discharge that debt just as easily as other debts in a bankruptcy case and receive a fresh financial start.

Click here to read more on this story.

If you have questions on this topic or are in financial crisis and considering filing for 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 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