Most college students require at least some sort of funding assistance to pay for their tuition. Government student loans are meant fulfill that need, but they come at a price; they must be paid back, with interest, or face further action. But with a job market that just starting to recover, and with national totals equaling about $1.3 trillion in student loan debt, as many as one in four borrowers are behind on their payments. Sadly, a recent U.S. Supreme Court case reminds them that they have little to no options for erasing or canceling that debt.
Student Loan Debts and Bankruptcy
Tuition costs have increased drastically over the years. To compensate, maximum government loan amounts increased as well. This may seem like a benefit in the short run, but the added obligation only makes it more difficult for struggling graduates. If they run into trouble—be it from a job loss, a divorce, an injury, or other major catastrophe in their lives—they may turn to bankruptcy to alleviate their obligations.
Sadly, most student loan borrowers find that, while they are able to claim private loans or other obligations may be claimed in a bankruptcy, their student loans are exempt. This is because taxpayer-funded government student loans are protected by decades-old laws. Extended to include non-government issued student loans in 2005, these laws require borrowers to prove an “undue hardship” – which can be vague, even in the best of states—to have their student loan debts cancelled.
Supreme Court Decision Discredits Wisconsin Man’s Claim of Undue Hardship
Undue hardships are extremely difficult to prove in most states; most examine factors like ability to work, ability to maintain living standards if forced to repay, and other various factors. But even in states where the qualifications are not as stringent, borrowers must still prove that forced repayment would impose an undue hardship on the borrower and/or their dependents. While it can and has been done, few are successful.
One such case is the Wisconsin man that attempted to have his student loans included in his bankruptcy. After having his request denied by multiple courts, his request was sent to the United States Supreme Court. They, too, analyzed his situation and determined he should still be responsible for his student loan debt.
In Debt? Speak to a Qualified Personal Bankruptcy Attorney Today
If you are drowning in debt and unable to meet your financial obligations, action must be taken. But it is crucial that you receive qualified and experienced advice when deciding what that action should be since missteps could make the problem worse. The Law Offices of Eric G. Zelazny can help you examine all your options to determine which path is best for you and your family. Schedule your free initial consultation with a dedicated and trustworthy Tinley Park personal bankruptcy attorney to learn more. Call 708-888-2299 today.