Student Loan Debt – the bane of many recent college graduates.
In an article that was written by economics writer Jeffrey Sparshott, and published on the Wall Street Journal’s website this past May, it was noted that the (new) average amount of debt that 2015 graduates have to pay back is slightly more than $35,000. Furthermore, it was also noted in the article that this new number was the highest student loan debt average to date. Whatever the case truly is, there is no denying that student loan debt is on the rise.
With high-paying jobs being scarce these days, and many companies folding and/or laying people off, many college graduates are left with a massive amount of debt that they cannot pay off. While some can still live with their parents, and make minimum payments until they find a job that will allow them to become entirely free of the constraints that college debt imposes, others cannot. Some graduates already have debt because they live on their own, have a car, etc. So, when you add student loan debt into the mix, it makes it even more difficult to live.
But, could it soon be easier to dismiss student loans when filing for bankruptcy?
Well, as of today, there are not many instances where filing for bankruptcy will allow individuals to free themselves of their student loans. In fact, there are only two “exceptions” that will allow graduates to erase student loan debt, one of which is if they can prove that it will inflict undue hardship on themselves, and their dependents.
However, BigNewsNetwork.com reports in a recent article that a Boston bankruptcy case may change the seemingly “unchangeable” laws that prevent the dissolution of student loans, as well as what specifically defines “undue hardship” when someone files. The case, which is that of 65-year-old Robert Murphy (a man who has filed for bankruptcy because he is unable to pay back over $246,000 in Parent Plus student loans, mostly because he recently lost his 13 year job as President of a manufacturing company), is causing the First Circuit Court of Appeals to reconsider how U.S. bankruptcy courts handle unpaid student loans. In fact, it was reported in the article that Murphy asked them to define what ‘undue hardship” means. Inevitably, the First Circuit Court of Appeals is not only strongly considering releasing Murphy of his debt, but it is likely that they are, indeed, looking into precisely defining “undue hardship” because of the question he posed.
In the end, reconsidering if college students can relieve themselves of their student loan debt when filing for bankruptcy is a big decision to make. While it sounds like it will make a graduate’s life easier, it may mean trouble for lenders, as well as the Department of Education.
As bankruptcy attorneys in Montgomery County, PA, we understand how difficult it can be for individuals to make the decision to file, especially if they are tied down with student loan debt. To hear more about how we can help, as well as what we have done for individuals who have come to us wanting to file for bankruptcy in the past, please do not hesitate to reach out to us.