The issue of student loan debt is one that has been a frequent topic of conversation in the media in recent weeks and months. The amount of outstanding student loan debt in 2019 is believed to be about $1.5 trillion. A large amount of that debt is held by millennials. In Maryland and elsewhere, many of them are struggling to find good paying jobs and are unable to repay their loans, causing them to file for Chapter 7 bankruptcy.
An estimated 32% of people who filed for bankruptcy under Chapter 7 had student loan debt that was a significant cause of bankruptcy. Chapter 7 allows a person with low income to file for debt liquidation where Chapter 13 allows for debt reduction. Student loans are not normally discharged, or forgiven, in a bankruptcy proceeding. For those with student loans filing Chapter 7 that means that the funds freed up by the discharge of credit card debt would often go to pay student loans.
Another contributing factor to the student loan debt crisis is the cost-of-living hurdles faced by many millennials. Some areas of Maryland have a high cost of living. Millennials who have decent paying jobs may struggle to pay student loan debt as a large portion of their income goes to pay for housing, food and other daily expenses.
Bankruptcy is often seen as a last resort for someone who is struggling to meet financial obligations. It can also be a means for a person to get a handle on the situation and get a second chance. Anyone in Maryland who finds oneself constrained by student loan debt, and is wondering how to rectify the situation, could benefit from having a conversation with an attorney experienced in bankruptcy law.