Can I get rid of student loans in a bankruptcy?
Many individuals have questions about bankruptcy and student loans in Utah. The increase in the number of students in this state in the last 10 years is phenomenal. Our local universities have grown substantially, not only in student body, but also in campus size, professors, and of course tuition costs. College tuition seems to rise every year and with more students attending our schools, more of us are leaving our secondary education owing a huge amount of debt in both private and government subsidized loans. Even more concerning is the fact that while home loan interest and other rates are at historic lows, many graduates are paying higher than ever interest rates on their college debt. This has led to a lot of noise in the media concerning what if anything can be done about this growing problem. At Salcido Law Firm, our team of Salt Lake City bankruptcy attorneys get many calls each week from struggling families who are struggling with student debt.
Student Loans and Filing for Bankruptcy
The question often arises; what can be done about student loans? Is bankruptcy an option on student loan debt? Are student loans dischargeable in bankruptcy? Unfortunately, the general rule regarding student loans is that they are non dischargeable in bankruptcy. This means, much like back taxes, your forever stuck with your student loans once you have them. This has led many to cry foul claiming student loans are akin to other predatory lending practices like sub prime mortgages or pay day loans. There is growing call for legislative action to deal with this issue. A recent Forbes articles addressed this problem and identified several ways in which student loans are predatory. First is the issue just mentioned that student loan consumers are not protected by the bankruptcy process. Second, most student loans cannot be restructured. Finally, student loans generally do not come with any statute of limitations, meaning you could literally in some cases be paying on your student loans for a lifetime. The grantors of these loans are at a definite advantage to the consumer when one considers the fact that more than 60 percent of all revenue generated in this industry comes from fees associated with loan defaults. Moreover, the collection rights these companies enjoy are far greater than other lenders.
Is Bankruptcy Still an Option for You?
Even if your student loans may not be discharged in bankruptcy, you still may have options and a bankruptcy still might make sense for you. For many Utah families and individuals, student loan debt is only a part of their bigger debt and financial picture. Most other types of obligations can be discharged in a personal Chapter 7 Bankruptcy in Utah. For more information, call and speak to a Utah bankruptcy lawyer in our office now. We provide free consultations both in our office and over the phone. We are available anytime and we have offices in Salt Lake City, Ogden, Provo, and St. George, so no matter where you live, we can help. Contact us today at 801.413.1753.