Congress Considers “Fairness For Struggling Students”

Currently, those who borrowed from private lenders to pay for their educations cannot discharge those student loans through bankruptcy, but some lawmakers want that provision of the bankruptcy law to change. The Fairness for Struggling Students Act of 2015, introduced in Congress this year by Illinois Senator Dick Durbin, would put private student loans in the same category as other private unsecured debts that are dischargeable in bankruptcy. If you are considering bankruptcy in the Chicago area – whether or not a student loan is part of your overall debt – discuss your circumstances at once with an experienced Chicago bankruptcy lawyer.

The proposed legislation is co-sponsored by a dozen other U.S. senators. It’s a response to the current student debt crisis; student loans currently account for more than $1.2 trillion of debt in the United States. For the student graduating today with a Bachelor’s degree, student loan debt averages about $29,000. Senator Durbin said in a written statement, “It’s time for action. We can no longer sit by while this student debt bomb keeps ticking.”

Even if the measure is approved, it would impact only ten to fifteen percent of those with student loan debt – those who borrowed from private lenders. Government-issued or guaranteed student loans would remain protected from discharge during bankruptcy. Some observers say that government-issued or guaranteed student loans keep borrowers buried under debt they may never be able to pay. In March, President Obama asked federal agencies to determine if government-issued or guaranteed student loans should also be dischargeable through bankruptcy.

For now, however, bankruptcy law remains unchanged. Before you make a final decision regarding bankruptcy in the Chicago area, you should realize that bankruptcy is not for everyone. The wise step is to discuss your alternatives with an experienced Chicago bankruptcy lawyer. If your debts are mounting, make the call today.