On behalf of Debt Advisors, S.C.

Many former students experiencing financial difficulties must choose between paying for basic living expenses (such as food and rent) and their student loans. They commonly defer their payments to avoid default, but this does not prevent interest from accruing on the loan and increasing the overall balance. As such, the eventual payments become too much to handle, and they consider bankruptcy. Unfortunately, the bankruptcy code offers little relief because student loans fall under the status of non-dischargeable debt, which cannot be cancelled through bankruptcy absent a showing of “undue hardship.” This is especially the case with private student loans.

Essentially, debtors seeking bankruptcy relief must satisfy each prong of the Brunner test (named after Brunner v. New York State Higher Education Services Corp.) They must show that they cannot maintain a minimum standard of living while paying their student loans, that their poor financial situation is likely to continue, and that they have made good faith efforts to repay their loans.

This is a very difficult legal standard to satisfy, so many unemployed Americans saddled with massive student loans do not escape from the penalties and interest that have accrued.

New Bills Aimed at Helping Struggling Student Loan Debtors

However, this may change. Senators Dick Durbin (D-IL), Sheldon Whitehouse (D-RI), and Al Franken (D-MN) introduced the Fairness for Struggling Students Act of 2011. Meanwhile, Congressmen Steve Cohen (D-TN), Danny Davis (D-IL) and George Miller (D-CA) and John Conyers (D-MI) introduced Private Student Loan Bankruptcy Fairness Act of 2011 in the House of Representatives. The proposed legislation would reclassify private educational loans as unsecured consumer debt, which would enable them to be discharged like credit cards, car loans and other types of privately issued debt. This was the case before the Bankruptcy Abuse Prevention and Consumer Protection Act was enacted in 2005.

Proponents believe that the time has come for banks to be more accountable in the student loan market, especially considering the profits made through exorbitant penalties and interest. With the possibility of risky loans being discharged in bankruptcy, banks would be less likely to make risky loans, or to bind impressionable students into such harsh terms. forced to make pragmatic decisions about such loans.

Staying informed about the intricacies of the financial and loan markets is imperative. Delving deeper into related topics, such as the recent developments with the Hardest Hit Fund and its impact on homeowners, or understanding the bankruptcy’s effect on employment opportunities, can provide a broader perspective. In light of these debates, a recap on the issues like wrongful foreclosures and mortgage resurgence can be equally insightful. For a comprehensive understanding, MyDebtAdvisors offers an extensive range of articles on these matters. Additionally, their Kenosha office provides localized insights and services, ensuring that the information and assistance you receive are tailored to your specific regional needs.

Source: Private Student Loans Get Bankruptcy Protection With Proposed Legislation

Learn about bankruptcy protections, types of bankruptcy, how to get started, what to expect, and who to trust. Filing bankruptcy is the ONLY way to completely eliminate debt. If bankruptcy is right for you, it offers powerful protections that cannot be achieved through alternative solutions such as hardship relief, loans, or debt settlement.

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    Steve

  • After I had to go on disability, I used my credit cards a lot more thinking I could pay them off when I was able to go back to work. That didn’t happen and I found myself so much worse off than I could handle. I went to Debt Advisors feeling terrible about what I had to do. Chad and everyone there were very understanding and put my mind at ease while taking such great care of me. They were there every step of the way and supported me when I was “freaking out”!! Every time I needed to contact them; their response time was amazing!! God forbid I ever need to go through this again, but I know where to turn if I need help! Debt Advisors are more than just filing bankruptcy on my behalf. They really care about what you are going through!! Thank you, Chad, Jeremy, Mike, and everyone at Debt Advisors!! I cannot tell you enough how much I appreciate all of you!! J Hammond

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