Among the most prevalent debt carried by American adults is student loan debt. Student loan debt has become a major issue for the United States at has been a hot topic for our policy makers for the past several years. Measures to extend lower interest rates were recently passed to ease rising interest rates on the student loans. Recently, President Obama set a limit to 10% of income on repayment plans of student loans which provides some easing of repayment plans, but does not relieve any amount of the debt. The President’s repayment limit only extends the amount of time to pay back the debt.
In this past week, Senator Elizabeth Warren proposed a plan to the Senate to allow student loans to be refinanced into lower interest rates and effectively reduce the cost of repayment of the loans. Funding for the plan was to come from new taxes to wealthy households. Warren sees the student loan debt as a crisis that threatens the financial futures of Americans. This was her measure to get some help from the wealthy and relieve some of the financial commitment to student loans. Unfortunately, the proposal did not pass in the Senate. For now, there is no additional relief for student loan debt.
We have mentioned many times before in previous articles that student loan debt can technically be discharged in bankruptcy. It is up to your attorney to know how the court system in your area interprets bankruptcy code to allow a discharge in bankruptcy. In most cases, student loan debt will not be discharged in a bankruptcy if you have the ability to work. In most cases, any ability to make income is enough to disqualify you from getting your student loan discharged in bankruptcy. So, if you are healthy and employed, it is not likely that you will be able to discharge your student loan debt in a bankruptcy. The government does provide information on how to get your student loans discharged in other ways. There are several different ways to defer or discharge student loan debt outside of a bankruptcy. You can find this information on the government’s student loan website.
Don’t let this news of a failed proposal discourage you from dealing with your debt. If you cannot discharge your student loan debt in bankruptcy, you simply need to focus your resources on the debt that cannot be discharged in bankruptcy. You can use bankruptcy to eliminate all of your other debts and focus on paying the debts that cannot be discharged in bankruptcy. There is always a path available to becoming debt free.
Bankruptcy Law Professionals is a law firm located in Southern California offering free bankruptcy consultations to all of our clients. Contact us at 855 257-7671 to schedule an appointment.