More and more these days, debt consolidation lawyers like me are dealing with adults, long out of school, who are in need of student loan debt help. Nowadays, in fact, student loan debt is hitting the headlines – and the Senate floor.
The issues surrounding student loan debt were summarized by Senator Durbin, who recommended the elimination of the law that makes privately issued student loans non-dischargeable in bankruptcy.
All of us in the Zuckerberg bankruptcy law offices know all too well that the new bankruptcy laws of Indiana (which follow the federal guidelines) treat student loan debt in a fashion similar to child support debt, alimony debt, overdue taxes, and criminal fines. My colleagues the Columbus bankruptcy lawyers often quote Illinois senator Dick Durbin, who said “Students who take out loans to finance their education should have the same right to discharge their debt in bankruptcy that other borrowers enjoy.”
Actually, as I often remind Bankruptcy in Indiana readers, while student loans are very, very difficult to discharge, it’s not impossible to do that. Courts evaluate a debtor’s “degree of hardship”. If the following three things are true (and in the 25 years I’ve been a lawyer for bankruptcy in Indiana, there have been isolated cases where all three of these were true), there is a chance that the bankruptcy court will rule in favor of a discharge of student loan debt.
Debtor could not possibly maintain even a minimal standard of living for him/herself and for dependents if he/she were forced to repay the student loan
This state of affairs is likely to persist throughout the repayment period
- Debtor has made a good-faith effort to repay the loans, but just couldn’t do it
Remember, by the time someone has come to me seeking Indiana bankruptcy help, things are already bad. Very bad. Years and years may have passed since her college days, but she lost her job last year and couldn’t keep up the payments. Or, he may have recently graduated but failed to find work in his field. In either event, by the time they arrive in my Indianapolis law office, debtors often need help to stop foreclosure, or even payday loan debt help.
This is all part of a very big, very bad statistic: Outstanding student loan debt reached $867 BILLION at the end of last year, greater than the total U.S. credit card debt!
So, under current Indiana bankruptcy law, is there hope for people who need student loan debt help? The answer is “yes”. And that’s true even if you can’t prove “hardship” under the existing very tough rules. The very act of filing personal bankruptcy in Indiana triggers the automatic stay, giving you breathing room and protecting you from collection actions on all debt.
While the bankruptcy/ student loan debate rages on, at my Indiana bankruptcy law offices, the help continues, dealing with problems one situation at a time!
Categorised in: Bankruptcy Indiana
This post was written by Mark Zuckerberg