While as of yet it remains difficult to discharge student loan debt obligations in bankruptcy, it is not impossible.  Currently, bankruptcy courts are hearing lawsuits called adversary proceedings to determine if financially troubled people appearing before it suffer sufficient hardship to qualify for discharging (wiping out) all, or part of, their student loan debt. 

Outside of bankruptcy, people can work with the U. S. Department of Education or other agency who has the student loan and obtain a ten (10) year payment plan, the sliding scale amount of which is determined by their income.  A percent of income is devoted to student loans.  After ten years, whatever remains is wiped out without having to pay.

Student loan debt has recently been attracting a great deal of scrutiny and attention from politicians, scholars and the media because it has become so prevalent that there is now more outstanding student loan debt in America than there is credit card debt.  Various proposals are pending as to how that issue should be addressed.

A very recent development is a bill introduced into the United States Senate by Senators Dick Durbin and Elizabeth Warren, which if passed, will allow people with a student loan debt to refinance their loan at current rates of interest if those are lower than the rates on their loans. This would be a significant benefit to many, because numerous matured and delinquent student loans are from the days of high interest rates. A significant number of student loan debts are at approximately 9% and could thereby be re-financed at less than 4%.  The bill as initially introduced would also amend the Bankruptcy Code to provide for discharge-ability of private (non-government) student loans.

The attorneys at Pollak, Hicks & Alhejaj, P.C. have the expertise and experience to be able to guide you as to the best way to deal with your student loan indebtedness.  We look forward to helping you soon.

By David G. Hicks

Attorney at Law

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