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Student Loan Reform and Bankruptcy

Student loan payment is currently a hot topic in the news. Many people are waiting for student loan reform to help ease some financial problems. The issue is that interest rates are scheduled to go up in July and the concern is around people being able to afford the payment once the interest rates reset. It was somewhat of an “introductory rate” that helped get people into these loans. The adjustable part of the loan seems to have caught everyone by surprise and has now moved the focus of politicians towards changing how student loan repayment is going to work. They are running out of time because the interest rate is set to go higher in July. The political climate, being an election year, allows for this subject to be a focus of attention and a platform to show what Obama can do to help people who might have trouble paying back the student loan if the rate goes up.

It is interesting that student loans are receiving this much attention, yet many Americans are trying to keep up with all types of other debt. Let’s not forget about credit card debt, mortgage debt, home equity line of credit debt. Many people are trapped in much higher interest rates than they are dealing with in their lives. Student loans should be viewed as a part of your whole financial picture. Currently, it is possible to bankrupt out of student loans if you can prove to the bankruptcy court that you are physically unable to work to pay back your student loans. So, it is legally possible to discharge student loans in bankruptcy, but the fact is that most of us are able to work, making it impossible to discharge the debt in bankruptcy.

Maybe the focus should not be so much on the student loans, but on the other credit problems that are at ridiculously high rates for people who were hit hard by the recession. We have seen some of our clients with credit card rates of 25% to 30%! If these same people have student loans, student loan debt is not at the top of the list of problems. If you cannot discharge your student loans, get rid of the debt that is costing you much more than the student loans. Change your focus to paying your student loan instead of other problematic unsecured debt. You can eliminate all unsecured debt with a Chapter 7 bankruptcy. Debt from repossessions, payday loans, past due cell phone bills, past due utilities, etc.

To learn more about how we can help you with your financial situation, contact Bankruptcy Law Professionals to make an appointment or ask questions at (855) 257-7671. Appointments are available in Riverside and Orange County locations.

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