Over the last several months, the subject of student loan debt has become a hot topic of discussion. As people struggle with overwhelming education-related debt, they might feel as though they can’t do much about it. Under current bankruptcy laws, student loans cannot be included in filings, so much that debt will likely remain after a bankruptcy case is discharged.
A recent trend reported by the Wall Street Journal may provide distressed consumers with even more questions. As a result of the way Chapter 13 bankruptcy laws are structured, people often face restrictions on the amount they can pay on student loan bills.
If a person is unable to make full payments, fees and interest can stack up. Since Chapter 13 bankruptcy cases involve debt repayment over the course of three to five years, student loan balances could actually end up being larger than when the case was first filed.
Of course, this report is something that should be taken under consideration when a person is thinking about filing for bankruptcy. After all, filing Chapter 13 is a major financial decision and should be weighed against all of the other debt relief options available.
At the same time, bankruptcy shouldn’t necessarily be ruled out as a viable alternative. Speaking with an experienced attorney can provide useful insight into this complicated process.
Bankruptcy is viewed by many as a way to discover a fresh financial start. Given the convoluted nature of bankruptcy laws, as this blog post reveals, it may take thoughtful planning and preparation to make sure that debt relief is realized.
Source: The Wall Street Journal, “Student-Loan Straitjacket,” Katy Stech, Sept. 30, 2013