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Earlier this month, United States Senators Dick Durbin (D-IL), Tom Harkin (D-IA), and Al Franken (D-MN) again introduced two pieces of legislation aimed at helping people struggling with their student loans. The two proposed bills are known as the Fairness for Struggling Students Act of 2013 and the Know Before you Owe Act of 2013. Importantly, Fairness for Struggling Students Act includes provisions to make it easier for student loan debtors to discharge private student loans in bankruptcy proceedings.
Student loan debt has been described by some observers as potentially being the next housing bubble. Some statistics published by the Center for American Progress that highlight the current student loan crisis include the following:
· The cost of obtaining a college degree has increased by more than 1,000 percent over the past three decades
· 2 in every 3 students who obtain a four-year bachelor’s degree graduate with an average of more than $25,000
· Ten percent of student borrowers now owe more than $54,000 in student loans
Federal student loans have been non-dischargeable in bankruptcy since the 1970’s, and bankruptcy law reforms that took place in the mid 2000’s similarly made private student loans non-dischargeable. In order to discharge private student loans, a borrower must show “undue hardship,” which is a notoriously difficult standard to meet. In addition, private student loans do not have the same consumer protection measures as federal student loans, such as lenient deferment or forbearance options and income-based repayment plans.
The proposed bill would effectively treat private student loan debt the same as other types of consumer debt. In addition, student loan debt can prevent indebted consumers from fully participating in the economy, keeping them from purchasing big-ticket items such as homes or cars.
If you have fallen behind on your student loan payments, bankruptcy may be able to help. Even if your student loans are non-dischargeable, the discharge of other debts may free up enough income in order for you to pay on your student loans. The Westbrook Law Group practices exclusively in the area of bankruptcy law, and has helped hundreds of consumers gain a fresh start through bankruptcy. In order to schedule a free consultation with an experienced St. Louis bankruptcy lawyer, contact The Westbrook Law Group at (636) 493-9231 today. If you would prefer to contact us via email, please fill out the contact form available on the right side of the screen and a member of our staff will be in touch with you soon.