Bankruptcy Filing for Student Loan: Would It Be Possible?
Often it is noticed that the students have filed for bankruptcy with debt consolidation attorneys in OKC and the reason is the student loan. According to a report of 2017 published by Consumer Financial Protection Bureau, 44 million student debt borrowers and about $1.4 trillion is the amount of outstanding debts. It is enough to demonstrate the burden on the students to pay back their loans.
A few years ago, the court did not allow bankruptcy for the student loans, but there were instances where the court discharged the student loan. It is obvious when the loan is discharged, there wouldn’t be any amount to repay. The HIGHER ED Act is introduced recently by Democratic Congressman Peter DeFazio from Oregon to make significant changes in the bankruptcy rules.
In this year only, the Department of Education has issued a request to collect the data and feedback on the decision. The reason was to know whether it is required to modify the undue-hardship claims under the bankruptcy evaluation.
According to the National Consumer Law Center, most of the federal courts except the 1st U.S. Circuit Court in Boston and the 8th U.S. Circuit Court in St. Louis have adopted the idea of Brunner Test in order to define to undue hardship. Here, it is imperative for the students to prove that:
They can maintain the standard of living besides paying the loan back.
They financial crunches can be stable in coming years or it would take a lot of time.
The students have tried to repay the loan or they have directly applied for bankruptcy.
The borrowers have to prove it that the students applying for bankruptcy are under severe financial troubles and their family is dependent on them and the hope of improvement of the scenario is pretty less. The debt consolidation attorneys in OKC can guide the students in this area.
The Department of Education is evaluating and reviewing these criteria so that they can come up with some guidance on when the student is facing undue hardship. It is also under the review if the loan-discharge can be made more accessible for the needy students.
On the contrary of these ideas, there is another possibility of this initiative. It would be easier for the students to get discharged from the loan amount and they might lose the interest of repaying it. The consumer debt consolidation attorneys in OKC support the change stating the fact that the struggle for loans is quite heavy for the students.
It is expected that the change will take place in sectors of the undue hardship for the student borrowers and the students would be able to file for bankruptcy including the student’s loans.