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Trouble discharging student loan in bankruptcy linked to Congress

As most workers in Washington already know, it is difficult -- if not virtually impossible -- to embark on a financially successful and personally fulfilling career without a degree from an institution of higher learning. While demand for college graduates increased, so did the price of college attendance, and many students are now faced with the decision to take out loans to attend school or skip the experience altogether. Now loaded down with debts that are often difficult to pay back, many students are realizing the helpful role that bankruptcy can play in their financial situation, even if their loans are not dischargeable.

One of the biggest questions that loan holders have is "Why are my loans not eligible to be discharged?" This is an entirely understandable frustration when most debts can be entirely cleared through Chapter 7 and many others are whittled down to a temporary payment plan with Chapter 13. This is largely in part to an act of Congress, which created tough restrictions for those who file for bankruptcy. Specifically, the fact that an educated workforce is good for competition within a global economy led Congress to determine that allowing the discharge of student loans would make them less available for a wide number of people.

It is not exactly clear if that would be true or not, but currently at least 41 million people in America are in debt to the government because of student loans. On average, each individual owes about $30,000, with 25 percent of borrowers in default or behind on payments. The student loan crisis is not a phenomenon experienced only by the young; data from 2013 revealed that $18.2 billion of the student loan debt is held by individuals who are at least 65 years old.

Many activists have voiced their concerns over the debt that is consuming students, but action has mostly been slow and negligible concerning the potential discharge of student loans in bankruptcy. Still, Washington students who have become overwhelmed by their debt can still pursue debt relief through the bankruptcy process. While their student loans will likely remain a fixed aspect of their lives, reducing or completely discharging other debt can create a more stable financial platform for individuals to move forward with.

Source: Forbes, "Why Student Loans Are So Difficult To Discharge In Bankruptcy", Stephen Dash, Oct. 25, 2015

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