Tavere

Free Case Evaluation

510-255-4646
  • Home
  • About Firm
  • Practice Areas
  • Testimonials
  • Attorney
  • Blog
    • Chapter 7 Bankruptcy
    • General Bankruptcy
    • Chapter 13 Bankruptcy
    • Bankruptcy Law
    • Bankruptcy News
    • Types of Debt in Bankruptcy
      • Bay Area Bankruptcy Attorney
  • Contact Us
Stop Worrying About Your Debt

A Better Tomorrow

Starting Today

Stop Worrying About your Debt.
Call us Now to Take the First Step.

Click Here
Millions in debt discharged for our clients

Real Concern

Real Help

Millions in debt Discharged
For our Clients. Call Today, let us Help!

Click Here

Why Can’t Student Loan Debt be Discharged in Bankruptcy? : How the High Cost of Higher Education is Dragging the Economy Down

wpadmin on October 30, 2012 Posted in Student Loans

The high cost of a higher education is saddling many Americans with debt they can’t afford and can do little about. As a bankruptcy attorney, dealing with clients who are facing large student loan debt can be very frustrating because, while I can help them with their credit card and medical debt, for most working people there is no way to discharge their student loans in bankruptcy.

This wasn’t always the case. Up until the mid-1970’s, both federal and private student loans were eligible for discharge in bankruptcy. Congress than began scaling back the ability to do this, first by excluding federal student loans from discharge. The next step Congress took was to prevent private student loans guaranteed by a non-profit agency from being discharged in bankruptcy. The final nail in the coffin known as the bankruptcy solution to student loans came in 2005, in what was named the Bankruptcy Abuse Prevention and Consumer Protection Act. As many commentaries have noted, this Act did very little to prevent bankruptcy abuse and protect consumers, but it did however make it nearly impossible to discharge student loans in bankruptcy. Under the new law, in order to discharge a student loan, a debtor must now show that payment of those loans would constitute an undue burden on them and their dependents. While different courts use different standards to determine what “undue hardship” means in terms of student loans, many courts feel that if you are able to work than you are able to pay your student loans. In addition, under the new law in order to discharge student loans, the debtor must now file an adversary proceeding against the student loan creditor to determine discharability. This adds an added layer of cost and complexity to a bankruptcy case which may price an already struggling debtor out of bankruptcy.

What does all this mean to the US economy? Well let’s look at the numbers. Currently, Americans are carrying more than 1 trillion dollars in student loan debt. Student loan debt accounts for more than any other type of consumer debt. At the same time, with the job markets still sluggish due to the slow recovery, fewer graduates are able to find gainful employment. More often than not, recent graduates are only able to find part time work or work that pays much less than what they expected when they took out their student loans. Any disposable income these recent grads have will be used to pay their student debt. Consumer spending accounts for 2/3 of the US economy. If the next generation can’t afford to shop because they are stuck in low paying jobs with an expensive student loan payment, that doesn’t bode well for the economic recovery.

So what is the answer? Putting a priority on education and making higher education more affordable is one option. Another option is allowing graduates who will never realistically be able to repay their student loans to discharge them in bankruptcy. The U.S. Department of Education and Consumer Financial Protection Bureau recently urged Congress to consider revising the Bankruptcy law to allow the discharge of private student loans. Senator Dick Durbin, a Democrat from Illinois, has introduced legislation in the last three sessions of Congress that would do just that. Unfortunately, with big banks and their ability to lobby against bankruptcy reform, the legislation is going nowhere. Unless lawmakers act soon, the combination of expensive student loan debt coupled with fewer job opportunities, might be the straw that breaks the economic recovery’s back. In the land of the American dream, getting a higher education shouldn’t turn into a nightmare.

The Law Offices of Melanie Tavare is a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code

Recent Posts

  • What Can You Do if You Cannot Keep Up With Chapter 13 Bankruptcy Plan Payments?

    If you filed for Chapter 13 bankruptcy but are struggling to keep up with the payments outlined in your debt repayment plan, you may not kn

    category : Bankruptcy Law, Blog

  • What is a Means Test and How Does it Work?

    When considering filing for bankruptcy, one of the most important steps is the means test. This test evaluates your financial situation to

    category : Bankruptcy Law, Blog

  • When Should I Stop Using My Credit Card Before Bankruptcy?

    Filing for bankruptcy is a difficult decision and one that should not be taken lightly. But if you have already made the decision to file,

    category : Bankruptcy Law, Blog

  • Can Filing for Bankruptcy Stop an Eviction?

    Facing eviction can be a stressful and difficult experience. If you are considering filing for bankruptcy to stop an eviction, there are ce

    category : Bankruptcy Law, Blog

search this year

  • February 2023
  • January 2023
  • Search by Year

  • 2023
  • 2022
  • 2021
  • 2020
  • 2019
  • 2018
  • 2017
  • 2016
  • 2015
  • 2014
  • 2013
  • 2012
  • img

    Quick Links

    • Bay Area Bankruptcy Attorney
    • About Firm
    • Practice Areas
    • Attorney
    • Communities Served
    • FAQ
    • Disclaimer
    • Contact Us

    Follow Us

    • Facebook
    • Twitter
    • Google
    • Yelp

    Contact Us

    • Oakland Office

      1300 Clay St. Suite 600
      Oakland, CA 94612

    • Hayward Office

      24301 Southland Dr.
      STE. 310
      Hayward, CA 94545

    • 510 255 4646

    We serve the following localities: Alameda County, Alameda, Berkeley, Castro Valley, Fremont, Hayward, Livermore, Oakland, San Leandro, Union City, Contra Costa County, Antioch, Brentwood, Concord, Martinez, Pittsburg, Richmond, Walnut Creek, San Francisco County, San Francisco, Albany, Ashland, Dublin, Emeryville, Newark, Pleasanton, San Lorenzo, and Alamo.


    The Law Offices of Melanie Tavare is a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code


    Hayward Bankruptcy Lawyer Melanie Tavare Home | Contact Union City Foreclosure Defense Attorney Melanie Tavare

    2022 © Copyright law office of Melanie Tavare