Most student loans cannot be discharged through bankruptcy, though some lawmakers are working to change the rules to deal with for-profit colleges and predatory lending practices in the sector.
Handling student loan debt can be done as part of a comprehensive plan devised with the help of a Denver bankruptcy attorney. At George T. Carlson & Associates, we realize families struggle to pay for college, often leaving students with significant amounts of student loan debt upon graduating. Under current law, student loan debt may only be discharged if:
- The loan is not insured by the government or funded through a government unit or nonprofit entity.
- It’s determined that forgiving the loan would pose undue hardship on the debtor and his or her dependents.
Denver Bankruptcy Firms Can Help
The undue hardship clause may come into play in a significant number of cases, particularly when for-profit colleges push tens of thousands of dollars in loans onto students studying for career fields with nominal earnings potential. This is a complex process and there are no guarantees. But, as the abuses of the college lending industry continue to make news, there is a push to make it easier for college students to escape the worst consequences of predatory college lending.
About two-thirds of college graduates graduate with debt – the average loan amount is $24,000; more than 7,000 students a year graduate with more than $100,000. And there is a huge difference between federal loans and private loans – $100,000 debt split equally between the two types of loans could result in $160 a month on the federal loan and more than $800 on the private loan.
With skyrocketing default rates – particularly during the high unemployment seen during the Great Recession—some lawmakers are working to fix the system. In 2011, lawmakers began work on a new bill that would make it easier to discharge those private loans. This is particularly critical because such loans don’t have the built-in relief and protections of federal loans, which offer repayment assistance, forgiveness and other programs.
In Colorado, the average student graduates with $20,866 in debt – ranking the state 30th in the nation, according to U.S. News & World Report. More than half of all Colorado graduates have student loan debt to repay upon graduation.
Bankruptcy Help with Student Loan Debt
There is a number of ways filing for bankruptcy in Denver can assist in student loan debt:
- Petitioning for a hardship discharge of student loan debt.
- Using debt forgiveness or repayment assistance programs available for federal loan debt.
- Discharging credit card debt.
- Erasing other debts and obligations, which can make it easier to focus on paying down student loans.
Contact a Colorado Bankruptcy Attorney Today
If you need bankruptcy assistance in Denver or would like more information, call George T. Carlson & Associates today at 888-615-9638 for a free consultation or contact us online. We are a debt relief agency. We help people file for bankruptcy under the Bankruptcy Code.
Denver Bankruptcy Help – 303-789-1313 – Free Consultation
