Bankruptcy Trends and Student Loan Debt

An article published in August by the Huffington Post entitled "Bankruptcy Should Be An Option For Some Student Loans" noted current trends in student loan activity. According to the article, as the share of college students taking out student loans continues to rise, the share of borrowers in default has also increased in correlation with rising unemployment rates. It is estimated by the Consumer Financial Protection Bureau that over 7 million borrowers are in default on their federal or private student loans. It is further estimated that only 4 in 10 federal loan borrowers are currently paying back their debt. With 45% percent of American households having some form of student loan debt, it is important to begin to look at solutions to this problem. In the article were suggestions from several different entities calling for new classifications for federal and private student loans. These re-classifications would allow private student loans which often have higher interest rates to be discharged through either chapter 7 or chapter 13 bankruptcy. Typically, student loan debt, along with tax debt and child support, are considered "priority debt" and present significant obstacles when attempting to discharge them through bankruptcy.

Douglas County Bankruptcy Lawyers have guided several clients through issues related to defaulting on student loan debt. If you have any questions regarding this or any other debt-related issue call today for a free consultation.

Bankruptcy Should Be An Option For Some Student Loans Huffington Post By Tyler Kingkade