Can Bankruptcy Help When You Have Student Loans?
The student loan debt crisis is a very real crisis, with the U.S. having a combined total of $1.48 trillion in student debt. That is $620 billion more than the U.S.’s total credit card debt. It is safe to say that the ever-rising costs of higher education are to blame. Unfortunately, the economy is unable to keep up with the cost of tuition, which is, on average, $34, 740 at a private college and $9,970 at a state college—per year, and that is excluding interest rates. The average salary for a college graduate is $50,556. For a state student, it would take a whole year of paying for no other living expenses to pay back the student loans. For a private college student, it would take nearly three.
Calculating in interest, which is four percent for unsubsidized student loans for an undergraduate education, a state college student is looking at monthly payments of $303 over a term of 20 years, at the end of which they will have paid an additional $22K in interest. For a private college student, monthly payments would be right around $848 per month for 20 years, at the end of which they will have paid roughly $63K in interest.
Of course, most students do not attend college strictly on student loans. Many have the help of parents, student aid, or their own earned income. The point is though that the country’s higher education system is making it increasingly difficult for graduates to pay for their education, which is why the student loan delinquency rate is 11.2 percent.
Are You Drowning in Student Loan Debt?
While a college education can be a worthwhile investment in one’s future, the truth is that life hardly ever goes as planned. Most college graduates do not get a job directly out of school (at least, not ones with salaries on which they can afford loan repayments), but most lenders expect individuals to be able to start making payments within a month of graduation. When students cannot, interest accrues. As individuals grow older, they accumulate other financial responsibilities, including health insurance, car payments, mortgage payments, medical expenses, and children. Before students know it, they have amassed a huge snowball of debt that they cannot seem to break free of.
If this is the situation that you are currently in, you may be feeling overwhelmed and frustrated, and as you struggle to regain control of your finances, bankruptcy may have crossed your mind. However, while bankruptcy can wipe away a number of your debts, it cannot wipe away student loans. That does not mean, though, that bankruptcy is not a viable option. Our West Palm Beach bankruptcy lawyers at The Port Law Firm deal with unique client issues on a daily basis. If you have student loan debt and want to learn more about how you can get it under control, contact our attorneys to see how bankruptcy might help.
When Bankruptcy Can Help
Just because bankruptcy does not typically discharge a person’s student loan obligation does not mean that it never does. More recently, bankruptcy judges are making exceptions for individuals who face undue hardships that affect them and their loved ones.
If you can prove undue hardship to the bankruptcy courts, a judge may discharge your student debt. Proving undue hardship involves proving three things: 1) That you maintain a minimal standard of living and have no room in your budget to repay your student loans; 2) There are additional circumstances that further complicate your ability to repay the loans; and 3) That you have made attempts in good faith to repay the debt.
However, even if you cannot prove undue hardship does not mean that you are out of luck. Every case is unique, and with the right guidance, you can get the loan discharge you need to get back on the path to financial freedom.
At The Port Law Firm, we want to help you do whatever it takes to relieve you of your financial burden. Whether that means helping you discharge your student loan debt or figuring out an alternative debt management option is of little import. Rather, what matters is that getting back to a state of financial comfort is possible when you have the right team on your side.
Relieve yourself of your burdensome debt, and reach out to our West Palm Beach bankruptcy lawyers today.