The new COVID-19 law temporarily suspends most, but not all, federal student loan monthly payments, accruing interest, and debt collections. The 880-page Coronavirus Aid, Relief, and Economic Security Act (“CARES”) has 4 pages of help for certain student loan borrowers. Section 3513 of CARES. It provides meaningful albeit temporary help, for those who qualify by having the right kind … Read More
Bankruptcy does discharge a student loan, but only if it meets a tough legal standard called undue hardship. Here’s what you need to prove. Criminal fines and restitution and child and spousal support are types of debts that bankruptcy essentially never discharges. Income taxes can be discharged but only after meeting certain conditions. We’ve covered these in our last … Read More
Chapter 13 bankruptcy can help you permanently stop student loan collection. It gives you more time and flexibility to show “undue hardship.” The Much Better Chapter 13 “Automatic Stay” Last time we explained how bankruptcy’s “automatic stay” immediately stops student loan collections against you. But if you file a Chapter 7 bankruptcy this protection from collections lasts only the … Read More
Chapter 7 bankruptcy can temporarily stop student loan collections. Here are several ways it can stop these collections permanently. Bankruptcy gives you tools to deal with special debts—including those you can’t easily write off. Last week we got into income taxes. Today we discuss student loans, focusing on this special kind of debt in Chapter 7 “straight bankruptcy.” Next … Read More
Chapter 7 will stop student loan collections. Then either write off the student loans through “undue hardship” or have time to deal with it. Our last blog post was about a Chapter 7 bankruptcy stopping a tax garnishment only temporarily. In that situation this was OK because it gave time to set up a payment program with the IRS/state. … Read More
To legally write off–discharge–a student loan in bankruptcy takes an extra step: proving that it is causing you “undue hardship.”
On September 6, 2016 the parent company of 136 ITT Technical Institute branches announced that it was closing. It immediately closed all of its classroom and online instructions across the country. It canceled the academic quarter that was to start on the following Monday, September 12, leaving about 45,000 students scrambling. ITT Tech had two locations in Louisville. One’s … Read More
Writing off a student loan in bankruptcy requires showing “undue hardship.” What is that?
Although it’s hard to get rid of student loans through bankruptcy, it’s worth knowing whether and how it can help.
Americans over 55 years old flunk the “student loan literacy” test. We have a generational divide in one of today’s biggest economic issues.
How well do Americans
Student loan borrowers are now buying houses and cars less, and have worse credit, than less educated people without student loans.
Credit card debt is almost the same as it was 10 years ago, vehicle debt is only modestly higher, but student loan debt is 4 TIMES as much.
The delinquency rate has doubled in just 4 years, in 2012 alone increasing as fast as at the worst of the 2007-2008 mortgage crisis.
The best way to improve how student loan borrowers are treated is to change the incentives for their loan servicers. That happened this week.
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