While bankruptcy can be a viable option for people who find themselves in financial trouble, some forms of debt cannot be erased through bankruptcy relief. One type of consumer debt that plagues many Americans has been the recent focus of debate in Congress and among consumer rights groups.
Student loan debt is generally not subject to discharge in bankruptcy. The unfortunate irony of that fact is that, during recent times of a struggling economy with high unemployment, many Americans who borrowed significant sums of money to get a college education have been unable to obtain the type of job that would allow them to repay the loans.
Between federal student aid and private loans through lenders such as Sallie Mae, more progress has been made with debt relief for federal loans. Extended deferment, payments based upon income and even forgiveness of the debt are among the options available to those owing the government. Little, however, has been done in connection with private lenders, whose receivables from student debt make up about 15 percent of all debt incurred for higher education.
Statistics show that interest rates are higher for private loans and that minimum payments are higher, too. The Consumer Financial Protection Bureau says that most people who have private student loans also have higher overall debt. All of these factors make the repayment of private loans even harder for borrowers in difficult financial straits.
Regardless of the outcome of the proposed legislation, some debt relief may still be available to those owing private student loan debt in Ohio. A bankruptcy attorney may help you to explore the best options available, even if it means discharging some other debts to help better manage the burden of student loans.
Source: The Huffington Post, “Senate Proposal Would Restore Bankruptcy Protection For Private Student Loans,” Tyler Kingkade, June 25, 2014