With student loan cancellation hitting major roadblock, bankruptcy still provides option for relief of other existing consumer debt

Posted on August 9, 2023 at 12:46pm by

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 filing, Chapter 7 bankruptcy allows people to keep personal property and discharge unsecured debts in 99% of cases, while Chapter 13 bankruptcy enables individuals with regular income to develop a plan to repay all or part of their debts.

Filing for bankruptcy may be a beneficial option to alleviate debt factors outside of student loans. If you have questions about your financial situation or are considering filing for bankruptcy, contact Sader Law Firm at (816) 561-1818 for a free phone consultation.