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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President Biden’s student loan forgiveness plan aimed to help alleviate around $400 billion of student debt, but last June, the Supreme Court struck down the measure with a 6-3 vote. Now, more than 40 million Americans will likely be left to resume loan payments at some point this fall. Deferments and forbearances provided what now looks like temporary relief, and individuals hoping to have up to $20,000 in student loan debt forgiven may have been busy accumulating debt elsewhere. According to the American Bankruptcy Institute, credit card debt is set to surpass $1 trillion in 2023. The average American household owes $10,000 in credit card debt and 46% of credit card holders carry debt every month. Coupled with rent or mortgage payments and the pending resumption of student loan payments, many individuals will be facing budget concerns. While most student loan debt proves difficult to discharge in a normal bankruptcy…
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