The White House has begun exploring the possibility of making it easier for borrowers to discharge student loan debt when filing for bankruptcy. This move sides with consumer advocacy groups and some federal lawmakers who have been calling for an investigation of this policy for years.
"We're glad they're making this a priority and hope Congress does also" said Ed Boltz, a North Carolina Bankruptcy Lawyer, and president of the National Association of Consumer Bankruptcy Attorneys.
In a February 2012 survey of its members, an overwhelming eighty-two percent of respondents said that the difficulty in discharging their client's student debt was a "big problem".
They said it prevented their clients from getting a fresh start.
Under current federal law, regardless of the source - federal or private - student loan debt cannot be discharged unless the borrower can show "undue hardship", a term not yet clearly defined in bankruptcy law. Several senators have urged the Department of Education to establish clearer standards governing undue hardship cases.
Bankruptcy in its simplest form is the process by which a consumer can eliminate or repay some or all of their debt under the protection of a federal bankruptcy court. However, in practice, the process can be much more complicated.
This latest effort by the White House appears to be the catalyst needed to give additional relief to debtors already experiencing difficult times.
If you are considering filing bankruptcy, contact us today. Our knowledgeable team of experienced bankruptcy attorneys would be happy to discuss your situation in more detail, and answer any questions you may have.