As the economy continues along a slow path toward recovery, many Florida residents are struggling to find and keep good jobs. Even those with a college education are finding difficulty in a slow job market, and in many cases are also faced with high levels of student debt. One recent report looks at the current debt scenario for those who took out private loans to fund their education, and suggests that filing for Chapter 13 bankruptcy may provide a much-needed solution.
Private student loans are not eligible for discharge under current bankruptcy law. A very limited number of exceptions are made, but those rare cases involve a demonstration of extreme circumstances. For most who borrowed to attend school, bankruptcy will not lead to the elimination of student loan obligations.
However, there may still be a benefit to filing for Chapter 13 bankruptcy. The bankruptcy process will lead to the establishment of a five year plan to restructure existing debt payments, including student loan debt. There is a string movement underway to change the rules that exclude student debt from eligibility for discharge through bankruptcy, and it is possible that a change could occur within that five year period.
Even if student loans are never allowed to be discharged through Chapter 13 bankruptcy, the process can still lead to the discharge of other forms of unsecured debt. This can leave borrowers with enough room in their budget to allow for repayment of the student loans. While this approach may not be the best solution for every Florida consumer, it is worth the time and effort to research whether it may offer benefits for one’s particular debt needs.
Source: Huffington Post, “My Private Student Loan Debt is Out of Control,” Steve Rhode, June 10, 2013