Millions of Americans have pursued higher education in order to be in a better place financially, only to discover that their student loans have saddled them with a lifetime of unmanageable debt.
In fact, student loan debt has reached an astounding $1.2 trillion nationally, with more than 7 million people in default.
Part of the reason student loan debt is so burdensome is because it is usually not dischargeable in bankruptcy.
Student loan debt can only be discharged through bankruptcy in extreme situations, such as when a person is facing serious health problems. Even then, the person can be hit with a significant tax bill for the debt that was discharged.
Why can’t student loans be discharged in bankruptcy?
Student loan debt wasn’t always blocked from bankruptcy. Back in the 1970s, Congress was unhappy with the nonpayment rate on student loans so it decided to pass a law that makes student loans nondischargeable.
Until that law is changed, Americans of all ages will continue to suffer when they cannot repay their student loans. For younger people, student loan debt can stand in the way of owning a home and reaching their financial goals, while older Americans can lose Social Security benefits after defaulting on student loans.
What are my options for dealing with student loan debt?
Many people who cannot afford to make their student loan payments also face other debt problems, such as credit card debt or medical bills.
Even though student loan debt usually cannot be discharged in bankruptcy, some people still decide to file for bankruptcy in order to get rid of their unsecured debts. This can make repaying student loans much easier to handle.
Ultimately, an experienced bankruptcy lawyer can walk you through all of your options in order to find a plan that helps you get back on track financially. While bankruptcy might not be able to wipe away your student loans, the debt doesn’t have to stand in the way of your American dream.