For many people in Ohio who have gone to college in the last 10 to 20 years, the burden of student loans may continue to weigh on them, especially if they went on after receiving an undergraduate degree to pursue advanced or professional degrees. Regardless of the nature of a person’s degree or line of work, they may well experience severe financial challenges that make them consider filing for bankruptcy. However, discharging student loan debt via a bankruptcy has to date been difficult if not impossible for many consumers.
As reported by MarketWatch, the American Bankruptcy Institute’s Commission on Consumer Bankruptcy recently released a series of recommendations or proposals that, if heeded, may pave the way for more people to experience relief from their massive student loan burdens through a bankruptcy plan. The proposals attack the problem from multiple angles and include instituting new guidelines as well as amending existing ones.
Currently, a person must prove they are experiencing an undue hardship in order to potentially discharge student loans in a bankruptcy. The recommendations laid out options to expand how that undue hardship is identified in an effort to allow more people to take advantage of this avenue today.
One new proposal on the table is the allowance of private student loans to be discharged through bankruptcy. Another proposal would allow debtors to include student loans in a bankruptcy if they have had to pay on the loans for at least seven years. Eligibility for veteran’s benefits or Social Security benefits may also provide a path to discharging student loan debt via bankruptcy.