Can I discharge my student debt in bankruptcy?
The concept of bankruptcy has been around since the inception of the United States, and various types of debts can be forgiven through a consumer bankruptcy proceeding. Unfortunately for millions of educated Americans, student loan debt is not currently found on this list; however, Congress is considering an amendment to current bankruptcy policy to allow for the possible forgiveness of insurmountable student loan balances.
A group of 12 senators recently introduced the Fairness for Struggling Students Act of 2015 – a piece of legislation aimed to reduce the staggering $1.2 trillion in outstanding education loans. While barely two pages in length, the potential impact of this Act is enormous, and could conceivably allow struggling borrowers the opportunity to enjoy financial peace along with their prestigious undergraduate, graduate and doctoral degrees.
In essence, the Act is drafted to include a new definition of dischargeable debt – namely, any debt made or guaranteed in whole or in part by the federal government or acquired through the attendance at an institution funded in whole or in part by federal funds. The definition also covers the discharge of debts acquired through the advancement of federal funds via stipend or scholarship.
Since 2005, private student loan debt has been excluded from the bankruptcy conversation, unlike other private secured and unsecured debts (e.g., mortgages, car loans, credit cards). However, as more and more students pursue higher education – and more and more university-level fraud is uncovered – the student debt amounts have skyrocketed. As a result, students have had to make mortgage-sized monthly payments, while delaying the purchase of a home or starting a family.
If you are considering bankruptcy and would like to discuss your options as a consumer debtor, please contact Miami Valley Bankruptcy today for a free consultation by calling 937-502-1040. Our experienced bankruptcy attorneys serve clients in Xenia, Jamestown and Beavercreek, Ohio.