The average American has approximately $38,000 in debt, excluding their home mortgage. Most personal debt is made up of credit card bills, auto loans, and small personal loans, and many consumers also have student loans to pay off. However, student loan debt is another issue in its own unique league. Approximately 44.7 million Americans with student loan debt struggle to repay personal and student debt, which can be overwhelming and has caused many people to live in financial hardship.
The most prudent option for eliminating both personal and student loan debt is to pay it off; yet, this isn’t an easy feat. High debt often creates a snowball effect that makes it next to impossible to make ends meet or make payments on time. When this happens, people look for a resource that can help them eliminate their debt and move forward with their lives.
How Does Filing for Bankruptcy Eliminate Debt?
Bankruptcy is typically thought of as a last resort for those struggling with financial debt. There’s a negative connotation associated with bankruptcy that makes people nervous about filing. However, in most situations, bankruptcy is an acceptable and reliable option to eliminate debt and create a fresh start for those struggling to pay off:
- Personal loans
- Car Loans
- Home mortgages
- Business debt
- Merchant debt
- Payday loan debt
- Divorce debt
- Boat/RV debt
- Credit card debt
There are two different types of bankruptcy, Chapter 7 and Chapter 13. Before a person files for bankruptcy, they should consult a trusted bankruptcy attorney to determine which option is best for them.
Is Student Loan Debt Exempt from Bankruptcy?
Unfortunately, not all debts are forgiven in bankruptcy and student loans are one of them. If a person is struggling with debt and student loans are part of the issue, they’ll still be responsible for their student loan debt after filing for bankruptcy. More than 30% of people who file for bankruptcy have student loan debt. Due to the fact that their debt is not forgiven in bankruptcy, these individuals still suffer financial hardship after filing.
The exemption of student loan debt is an old policy that’s considered outdated by many in Congress. In January, U.S. Sen. Dick Durbin, D-IL, introduced the Student Borrower’s Bankruptcy Relief Act of 2019. If passed, the act would eliminate the section of bankruptcy laws that makes it impossible to eliminate student loan debt through bankruptcy. This act could save millions of Americans from payment default and financial destruction.
Debt Settlement is a Viable Option for Student Loan Borrowers
Although the Student Borrower’s Bankruptcy Relief Act is not in place yet, there are still options for those suffering from student loan debt. One is debt settlement, which works to reduce or even eliminate student loan debt and clears the borrower of their payment responsibilities. Unlike other options such as forgiveness that are difficult to attain, the debt settlement process is straightforward — if you have the right help. The best way to determine if you’re eligible for debt settlement is to consult an experienced attorney.
McCarthy Law, PLC, is a law firm that helps people negotiate their debt for a fraction of what they owe. The attorneys at McCarthy Law understand the pain associated with debt and will work tirelessly to help you through the process of finding a way to manage yours.
If you’re ready to break free from your student loan debt, there’s no better time to do it than today. Call McCarthy Law PLC at 855-976-5777 or complete our contact form for a free consultation.