In a poor job market, student loans often pose significant hardships to graduates. Even students who successfully find work in their field may still be saddled with debt for decades. While one part of the solution to this problem must be stricter lending criteria and wiser use of student debt, for students who already have debt, consulting a bankruptcy attorney Orange County CA may prove quite helpful.
Up until recently, student loan debts were incredibly difficult to discharge in a bankruptcy. A bankruptcy attorney Orange County CA was only able to help with this type of debt in truly extreme cases. Federal loans have been protected from bankruptcy filings since 1978, and private loans gained protection in 2005. Now, however, there is hope that one of these decisions may be reversed.
Fairness for Struggling Students Act of 2013
At the end of January, the Fairness for Struggling Students Act of 2013 was introduced into the Senate. The act calls for the reversal of the 2005 ruling, and would once again allow for private student loans to be easily discharged in a bankruptcy, without the need to meet strict special requirements first. The Senators introducing the act believe that student loans should be treated like any other type of private debt, and should not be protected from bankruptcy filings.
Federal student loans will remain protected, in order to avoid placing extra strain on government coffers. Right now, there is about $1 trillion dollars tied up in student loans. About 85 percent of that belongs to the federal government, and in the current financial climate it simply isn’t feasible to let go of that cash. However, the loss of the remaining 15 percent of student loans, which came from private lenders, could be absorbed.
Private student loans generally have less favorable terms than federal ones, and therefore place extra burdens on unemployed or underemployed students. This is yet another reason to hope that the Fairness for Struggling Students Act of 2013 goes through.
Voices Against the Act
Opponents of the proposed act argue that since many students lack significant assets, filing bankruptcy to escape private student loans will have few drawbacks and major rewards. They worry that students will automatically file for bankruptcy as soon as they complete their education, rather than waiting to see if the loans really do present a significant financial burden.
If the act passes, no doubt many students will be turning to a bankruptcy attorney Orange County CA to help them take advantage of the new legislation. If you have burdensome student debt, you will definitely want to keep an eye on this act.
In a poor job market, student loans often pose significant hardships to graduates. Even students who successfully find work in their field may still be saddled with debt for decades. While one part of the solution to this problem must be stricter lending criteria and wiser use of student debt, for students who already have debt, consulting a bankruptcy attorney Orange County CA may prove quite helpful.
Up until recently, student loan debts were incredibly difficult to discharge in a bankruptcy. A bankruptcy attorney Orange County CA was only able to help with this type of debt in truly extreme cases. Federal loans have been protected from bankruptcy filings since 1978, and private loans gained protection in 2005. Now, however, there is hope that one of these decisions may be reversed.
Fairness for Struggling Students Act of 2013
At the end of January, the Fairness for Struggling Students Act of 2013 was introduced into the Senate. The act calls for the reversal of the 2005 ruling, and would once again allow for private student loans to be easily discharged in a bankruptcy, without the need to meet strict special requirements first. The Senators introducing the act believe that student loans should be treated like any other type of private debt, and should not be protected from bankruptcy filings.
Federal student loans will remain protected, in order to avoid placing extra strain on government coffers. Right now, there is about $1 trillion dollars tied up in student loans. About 85 percent of that belongs to the federal government, and in the current financial climate it simply isn’t feasible to let go of that cash. However, the loss of the remaining 15 percent of student loans, which came from private lenders, could be absorbed.
Private student loans generally have less favorable terms than federal ones, and therefore place extra burdens on unemployed or underemployed students. This is yet another reason to hope that the Fairness for Struggling Students Act of2013 goes through.
Voices Against the Act
Opponents of the proposed act argue that since many students lack significant assets, filing bankruptcy to escape private student loans will have few drawbacks and major rewards. They worry that students will automatically file for bankruptcy as soon as they complete their education, rather than waiting to see if the loans really do present a significant financial burden.
If the act passes, no doubt many students will be turning to a bankruptcy attorney Orange County CA to help them take advantage of the new legislation. If you have burdensome student debt, you will definitely want to keep an eye on this act.
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