Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
Should student loans be dischargeable in bankruptcy again? As of now its next to impossible to discharge them, should the stranglehold be loosened? Do you think having the rules the way they are now are good or bad?
Should student loans be dischargeable in bankruptcy again? As of now its next to impossible to discharge them, should the stranglehold be loosened? Do you think having the rules the way they are now are good or bad?
Where is the stranglehold? You sign a document saying "If you lend me X, I will pay it back with x interest." No one held a gun to your head and made you take the money.
If a person files BK and gets their credit card debt washed away then that should free up money to pay back a student loan (which usually has a low interest rate).
What if your employer said "Hey, we didn't sell a lot last week so I'm not going to give you your paychecks this month" would you think that was just fine?
The DOE is pretty flexible on repayment. You can negotiate a lower payment if you need to, or defer for a period of hardship. Beyond that, it is still possible to have the loans discharged if no agreement can be reached and they represent a bona fide undue hardship. But as said above, if all or most of your other debt is being set aside, you should have an easier time repaying your loan(s).
So no, I don't think the law should be changed to make it easier for graduates to escape their loan repayment.
Where is the stranglehold? You sign a document saying "If you lend me X, I will pay it back with x interest." No one held a gun to your head and made you take the money.
If a person files BK and gets their credit card debt washed away then that should free up money to pay back a student loan (which usually has a low interest rate).
What if your employer said "Hey, we didn't sell a lot last week so I'm not going to give you your paychecks this month" would you think that was just fine?
You know how hard it is to discharge student loans? You need to prove "undue hardship" which is basically:
that you cannot maintain, based on current income and expenses, a 'minimal' standard of living for yourself and your dependents if forced to repay the loans;
This is usually the easiest prong to satisfy.
2. that additional circumstances exist indicating that this state of financial affairs is likely to persist for a significant portion of the repayment period of the student loans; and,
3. that you made good faith effort to repay the loans.
The student loan companies know you cannot discharge it and will hassle you to no end. Also, the student loan companies know you have to repay it sooner or later and there customer service is quite crappy to say the least.
The DOE is pretty flexible on repayment. You can negotiate a lower payment if you need to, or defer for a period of hardship. Beyond that, it is still possible to have the loans discharged if no agreement can be reached and they represent a bona fide undue hardship. But as said above, if all or most of your other debt is being set aside, you should have an easier time repaying your loan(s).
So no, I don't think the law should be changed to make it easier for graduates to escape their loan repayment.
Why is it OK to discharge your obligation to pay a credit card or car payment but not a student loan?
You know how hard it is to discharge student loans? You need to prove "undue hardship" which is basically:
that you cannot maintain, based on current income and expenses, a 'minimal' standard of living for yourself and your dependents if forced to repay the loans;
This is usually the easiest prong to satisfy.
2. that additional circumstances exist indicating that this state of financial affairs is likely to persist for a significant portion of the repayment period of the student loans; and,
3. that you made good faith effort to repay the loans.
The student loan companies know you cannot discharge it and will hassle you to no end. Also, the student loan companies know you have to repay it sooner or later and there customer service is quite crappy to say the least.
Yeah, matty. Bankruptcy is supposed to be hard. It isn't to make your life easy or comfortable. It is supposed to merely keep you from being homeless or starving to death while you repay your debt. That's it.
Sorry if you thought otherwise.
And lest you think I am unsympathetic, I had massive student loans--3x what I earned annually, starting out after college. My monthly payments were almost as much as my rent. I didn't get to party or travel or buy nice clothes like my friends. I had to work a second job, and as much overtime as I could get, and work in a city that wasn't my top choice because it had a better cost of living. And I'm still paying off those student loans. I'm getting close to being done, and I wonder what it will be like to not have this albatross around my neck. Freedom!
But then, I didn't have to go to college at all. And I know my life would be a lot worse now if I didn't.
If you could get out of your obligation for student loans, I imagine the interest rate would rise to compensate for those who don't pay them back. Then those students who are working their butts off to pay them off would suffer because of those who aren't paying them.
Why is it OK to discharge your obligation to pay a credit card or car payment but not a student loan?
For one, some of that is public money. Federal loans...your society agreed to lend you that money in order for you to better yourself. Your obligation is to repay that debt so other people can have the same shot you did, and hopefully be more sucessful.
Private loans are different but the bottom line is someone agreed to lend you money and you agreed to pay it back. Right? Who SHOULD be left holding the bag when things go bad, them or you?
One of the main reasons that you can no longer file bankruptcy and get rid of the those student loans is because of doctors. Many, many doctors (not all doctors, of course) would come out of med school and then file bankruptcy because they don't make a lot right out of school. Then, many are making bank a few years later, sans loans.
No fair.
However, this is the rumor that was circulating the law school my husband went to as they all griped about their hideous loans. So.....perhaps that should be taken with a grain of salt.
Oh, and I do want to make it clear that I think people should pay back their loans. It's not free money. If you don't pay it, someone else does. And as someone who gets to help pay back those awful law school loans (which are more per month than my mortgage), I know how it feels. However, we chose those loans, knowing that the govt. does not offer the most fair interest rate. Still, that is how it is. I would never even consider declaring bankruptcy, or put myself in the position to need to.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
