Do Consumer Bankruptcy Filings Eliminate Student Loan Debt?
Not only does education create career opportunities, it can also foster financial gain. But when are the costs of reaching your educational goals too much? And what happens if you cannot pay your school bills?
Most Americans attending college or university receive student loans to pay their way through school. These loans can be obtained through the federal government or private lenders, but different regulations govern each type of loan.
While federal loans have specific limits on factors such as interest rates, there are no such limits in place for private loans. This can cause financial difficulties for those responsible for these loans.
A recent article from CNN Money told the story of a father of a young woman who died. He was left liable for covering $100,000 in private student loans that he had co-signed for his daughter. Unable to make the payments, interest rates swelled the total owed to more than $200,000.
He considered filing for consumer bankruptcy, but was unable to have the debt discharged, as the law currently doesn’t allow for student loans to be eliminated through bankruptcy. This has sparked a controversy leading to a proposal to allow student loan debt from private lenders to be discharged if debtors can prove the payments cause financial hardship.
The Arkansas bankruptcy attorneys with Rainwater, Holt & Sexton recognize the financial woes brought on by student loan debt and are hopeful to see legislation that could positively impact the lives of millions of Americans.