Student loans are making headlines again, and, as a debt consolidation lawyer who’s been offering Indiana bankruptcy help for almost 25 years, I know that’s not good.
“The amount of student loans taken out crossed the $100 billion mark for the first time, and total loans outstanding will exceed $1 trillion for the first time this year” (meaning 2011), reported USAToday.
To the bankruptcy attorneys in Indiana who work in the Zuckerberg bankruptcy law offices, these scary statistics mean that of the hundreds of Indiana residents who file personal bankruptcy in Indiana in the coming year, an unprecedented number will need student loan debt help.
The way reporter Alex Pareene puts it, “This is unprecedentedly awful for an entire generation of young people just entering adulthood.” Why so awful? Pareene predicts that graduates will need to use their earnings towards debt repayment rather than towards buying homes and building up savings.
Under the new bankruptcy laws of Indiana (and under the U.S. bankruptcy code), the only circumstance under which a student loan can be “discharged” is when the loan imposes “undue hardship”. The courts interpret this to mean that it would literally be impossible for the debtor to repay the student loans and still maintain even a minimal standard of living. Unlike the case with other kinds of unsecured loans, filing personal bankruptcy in Indiana will typically not provide direct relief to student loan debtors. That rule holds true for both private student loans and government-backed loans.
One question that the bankruptcy lawyers in Columbus, in Bloomington, in Anderson, and in Indianapolis are often asked is whether it’s hopeless for student loan debtors to even file individual bankruptcy in Indiana. The answer is a resounding “No!”
Here’s how, even given heavy student loan debt, bankruptcy can help:
- The collectors of student loans who are harassing you for overdue payments will be put “on hold” for up to five years. (That won’t make either the debt or the interest accruing on the debt go away, but it will give you some breathing room.)
- Some of your other debts could be discharged through bankruptcy, freeing up money for repayment of student loans.
As a longtime lawyer for bankruptcy in Indiana, I stay involved in efforts to change bankruptcy laws of Indiana to allow for forgiveness of student loans. While, so far, these efforts have been unsuccessful, my colleagues and I have been very successful in using bankruptcy to help people gain overall relief from debt, so that they can fulfill their student loan obligations over time.
Categorised in: Bankruptcy Indiana
This post was written by Mark Zuckerberg