Can I Discharge My Student Loans?
College students have taken on tremendous debts in recent years. Here’s a frightening statistic: The total college debt for Americans is actually greater than the country’s total credit card debt!
Ask bankruptcy judges how many student loans they have forgiven. Most will say: Zero.
The reason this debt is so immense is that it does not go away. Student debt, which weighs so heavily on the shoulders of our young people, trying to get started in life, cannot be discharged except in extreme situations. This is the result of an act of Congress in the 1970s, when representatives were unhappy about the high rate of nonpayment. So they voted to make this terrible debt nondischargeable.
Student loan debts hurt older folks as well. Defaulting on federal loans can lead to bad outcomes such as the garnishing of your Social Security benefits.
Even if you are really broke, and you file for Chapter 7, and all your other unsecured debts are wiped away, your student loans — often made at high interest rates — do not go away. Indeed, they continue to grow.
So What Can You Do?
Until the law changes, there is not much you can do. There are only very narrow loopholes.
One for persons with extreme health problems.
One is to charge that the school defrauded you or misrepresented itself in some way. A few cases have succeeded by asserting that the school did something wrong or failed to do something that it should have done. This approach has not met with much success.
Until this student loan situation changes — and reform efforts are underway — debtors may have to comfort themselves that Chapter 7 stripped away a lot of credit card and other unsecured debts, making student loan repayment more possible. But we agree that this is small consolation.
Can student loans be discharged? Not easily. But talk to the lawyers at McBride Law Firm, of Alexandria, Louisiana, at 318-625-0471. Our attorneys stand with you in wanting reform in this area.