Submitted by Rachel R on Fri, 10/04/2013 - 12:01am
Image source: Gawker.com
The government has recently released student loan default numbers and for the sixth straight year, they are increasing. This data only applies to recent graduates who have completed their education within the last two to three years. But the student loan crisis is so much deeper than these numbers indicate. There are millions of student loan borrowers in default and struggling financially who have been out of college for years and who will never be able to get out from under their student loans because they are accumulating interest and fees faster than cash strapped debtors can pay them down.
And while currently it is possible to get student loans wiped out in bankruptcy, it is a challenge. You have to file what’s called an adversary proceeding which is a separate legal action that costs more on top of the standard costs of bankruptcy. This alone can make it more of a barrier. But what also is an issue is that many consumers don’t even know the option exists. Another barrier is that because the proceeding is not common, many attorneys don’t have experience handling them.
Image source: MLive.com
And the student loan crisis concerns go far beyond just the individual borrower. Those that are overwhelmed with student loans they cannot pay (and will never be able to pay) cannot participate meaningfully in our economy. This means that their money problems become economic problems for all of us to contend with. Student loan debt now exceeds credit card debt by nearly 30%. Most grads owe more than $20,000 and many owe much, much more.
And if the economy was in better shape and more jobs were available, these grads would be fully employed and would have far less trouble servicing their educational debts. But with unemployment still an issue, for many this is not the reality they expected when they entered college and took on these debts. The ability to get some relief in bankruptcy could make a significant improvement in our economy and in the lives of millions drowning needlessly in debt.
Image source: TheAtlantic.com
At one time, it was much easier to get relief from student loans in bankruptcy but lawmakers made it much more difficult and threw up roadblocks that have not served the government, our economy or indebted borrowers well. Here are some of the suggestions that have been proposed by experts to make the bankruptcy system fairer for student loan borrowers:
If our lawmakers don’t act soon, more and more borrowers will continue to be disenfranchised by unmanageable student loans. If you are underwater with your student loans and also dealing with other debts, bankruptcy may be a fit for you. Contact a reputable North Carolina bankruptcy attorney like John T Orcutt who can explain how an adversary proceeding for student loan relief works and can tell you if you’re a likely candidate. Contact us now for a free immediate consultation on your financial dilemma.
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