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Filing Bankruptcy on Student Loans – I Don’t Think So

Over the last 20 years, the US has put a high priority on higher education. Everyone wants their kids to go to an Ivy league university and get a high-paying job after graduation. The only problem with this theory is it doesn’t work. There aren’t any high paying jobs available to college graduates these days. In fact, the unemployment rate of new college graduates is around 40% when these kids get out of school. To add insult to injury, they will be burdened with student loans from this expensive education. Many unaware young adults think they can file for bankruptcy and eliminate these loans, not so. Sure education is good but not when it leads to filing bankruptcy. The problem is when young adults are saddled with student loans, the minimum wage job they can get isn’t enough to help them survive. So now you have a new generation of college graduates sleeping on mom’s couch while they’re filing for bankruptcy to get rid of other debt they can’t afford to pay because of the student loans.

Many of these students continue their education to avoid paying the student loans. There are many young college graduates applying at big-box retailers that have PhD’s and master’s degrees. It’s not that they didn’t want to get out of school and get a job, but when they found out that no jobs were available, they double downed and went back to school to further their education. One thing that many people don’t know is student loans aren’t paid back while the individual is going to school. So many are now becoming professional students as they’re racking up huge amounts of debt. The student loan debt has gotten to such exorbitant amounts, it is now called a bubble by many experts. This debt has now surpassed $1 trillion in the US. This is just plain old crazy, what happened to the days when kids went to junior college for two years and transferred to a four year university, working their way through school waiting tables. Back in those days, kids emerged from school being debt free. There are multiple people here to blame when it comes to this topic. First, there has been a high priority but on higher education all the way from K. through 12. It has been pounded into the kids heads that they won’t be anything unless they get an expensive education. Second, the government has made these guaranteed loans available for anyone and everyone that asks for one. Consequently, many of these individuals don’t realize what they’re getting into and find themselves changing careers early in life while not making enough money to live and pay these loans back.

Now, when a young in debt adult decides to file bankruptcy, the first question they will ask the bankruptcy attorney, is it possible to wipe out student loans in the bankruptcy discharge? When the bankruptcy attorney says no, they will probably follow up with they heard it was possible because they read it on the Internet. Technically, it is possible, but the burden of proof is pretty extreme for an individual to be able to include them in their bankruptcy filing. The person will need to show that they never will be able to pay these loans off. So as a rule of thumb, a bankruptcy attorney will look at the person’s age and physical condition. Just because someone can’t get a job isn’t a good enough reason to discharge these loans. Usually, it will take someone suffering a catastrophic accident or illness where they become disabled or someone is becoming elderly and no longer in the job market. It’s probably much easier to find the elusive Chupacabra in the wilderness. In other words, it’s next to impossible to file bankruptcy on student loans.

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