The Fight to Discharge Student Loans

The National Association of Consumer Bankruptcy Attorneys (NACBA) is currently lobbying Congress in support of a bill aimed at letting debtors discharge private student loans during bankruptcy filings (federal loans would not be affected).

Currently, it’s very difficult to get student loans discharged by bankruptcy court unless there’s a finding of “undue hardship.” However, courts interpret this verbiage very strictly, so it’s rare one’s student loans are forgiven under bankruptcy. Typically the only time this occurs is as the result of total and permanent disability.

“The Private Student Loan Bankruptcy Fairness Act of 2012” is a bill currently in the House of Representatives, and a similar bill, “Fairness for Struggling Students Act,” is currently in the Senate. Both bills allow debtors to be forgiven from private student loans from lenders like private banks or Sallie Mae. Again, federal loans are not affected.

Outstanding student loans in the United States currently total over $1 trillion. This is even more than our nation’s credit card debt, currently topping out at about $800 billion. It’s obvious student loan debt is a huge problem.

“There simply is no reason to allow private student loans to be treated differently from other types of unsecured credit,” NACBA said in a report Feb. 7. “In fact, exempting these loans from discharge is likely to cause even more harm for borrowers.”

If you find yourself in a financially difficult situation due to debt, you have options. For an in depth look at your situation you should contact a full service debt relief law firm like Harold Shepley & Associates. We can answer any questions you may have about debt relief and bankruptcy. Contact us today at 1-866-284-7062 or visit us at www.shepleylaw.com to find out more information on your debt relief options.

By Harold Shepley | Published March 29, 2012 | Posted in Bankruptcy, Student Loans | Tagged bankruptcy court, bankruptcy filing, discharge, student loans | Leave a comment