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May 17, 2012 /24-7PressRelease/ -- According to the Federal Reserve Bank of New York, approximately 37 million Americans have student loan debt, creating a student debt load of $870 billion. The research revealed that student loans are not just for young adults. People age 60 and older still owe $36 billion of their own student loan debts and they are delinquent on more than $3.6 billion of that amount.
There are two main types of student loans: private and government-backed. Bankruptcy laws have changed over the years regarding treatment of these two types of student loans:
- Prior to 1976, all student loans were dischargeable in bankruptcy
- In 1976, Congress required borrowers to wait five years before filing for bankruptcy protection from student loans
- In 1998, discharge of federal student loans was curtailed
- Congress, in 2005, protected lenders further by making it nearly impossible to discharge private student loans
Now, Senator Richard Durbin is attempting to overturn the 2005 law. Currently, the law allows Americans to wipe out most consumer debts through various types of bankruptcies. Stepping back to the way things were prior to 2005 would provide the same bankruptcy protection for private student loan debts as the law provides to every other form of consumer debt.
Although only 15 percent of student loans are from private lenders, private loans usually have interest rates that are higher and more unstable than those on federal student loans. As a result, it is the private loans that most frequently cause debt problems for former students.
According to the Washington Post, consumer advocates have found some borrowers struggling to pay student debt that is decades old, reporting that garnishment of Social Security payments is not uncommon. Additionally, many senior citizens are not only paying their own debts, but are also helping their college graduate children who cannot find jobs that pay enough to cover their own bills.
If you are struggling to pay student loans or other consumer debt, seek the advice of an experienced bankruptcy attorney and find out your legal options. Laws change frequently and your situation may warrant bankruptcy protection.
Article provided by The Roll Law Office, PLLC
Visit us at www.bkinaz.com
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