With certain student loan payment requirements set to resume after a nearly four-year pause, the Federal Reserve Bank of New York found this may not result in a significant impact on the economy. However, borrowers have taken on more debt burdens since the COVID-19 pandemic. Despite the relief the government provided during Covid, all this debt combined results in challenges that there may now be additional payments unaccounted for within an individual’s current budget. While most student loan debt is not dischargeable, bankruptcy may provide relief for other debts and eliminate the need to take on more credit card debt or personal loans. This is especially true for those facing any of the circumstances outlined in this recent Yahoo! article that detailed the Fed’s study and other reports related to the economic impact when payments resume for thousands of individuals. The Fed’s study found borrowers would reduce their spending by…
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For the first time in several years, auto loans have passed student loans, becoming the second largest debt burden for U.S. consumers. Based on data from the Federal Reserve Bank of New York, auto loan debt has reached $1.582 trillion, compared to $1.569 trillion in student loan debt, WSJ Pro Bankruptcy reported. During the financial crisis of 2008, many individuals, some of whom had lost their jobs, decided to go back to school for new education and training. This resulted in higher levels of student borrowing. However, during the pandemic, millions of Americans were able to set aside thoughts and stress about student loans, as the U.S. government paused payments and interest on federal student loans. Nonetheless, this did not mean that consumers stopped purchasing vehicles during this time. Consumers in the U.S. continued to buy cars that were often sold at inflated prices. New and used vehicle inflation reached…
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A federal bankruptcy court recently ruled student loan servicer Navient cannot collect on $182 million worth of loan debt at issue in a long-running litigation matter. The settlement provides relief to about 4,600 student borrowers whose loans exceeded college tuition costs. The plaintiffs in Homaidan v. SLM Corp. alleged Navient violated their legal rights by continuing efforts to collect on debts that were discharged in bankruptcy. In what became a high-profile bankruptcy class action, Navient has also been ordered to pay $16 million to compensate for litigation costs of the people involved in the legal battle and take steps to help remove the debts from borrowers’ credit reports. However, most notably, the company has now publicly backed reform related to how student loans can be handled through bankruptcy. According to the Philadelphia Business Journal, Navient has reached an agreement in principle or concluded litigation in three other matters similar to…
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