Most Maryland consumers are aware that student loans are not currently eligible for discharge through consumer bankruptcy. This may change, however, if newly proposed legislation is passed through the House and placed into effect. The Discharge Student Loans in Bankruptcy Act proposes allowing educational loans to be included within the scope of debts that are included within bankruptcy protection.
In support of the bill, Rep. John Delaney asserts that the current bankruptcy law places student loan debt in a category by itself, as virtually all other forms of debt can be discharged through the bankruptcy process. He claims that the current law is unfair to those who are struggling to pay down their loans. Delaney also points out that student loan debt is detrimental to the nation’s economic growth and causes monthly financial strain for many Americans.
Researchers with The Institute for College Access & Success claim that 69 percent of the 2013 graduating class emerged with an average of $28,400 in student loan debt. Those behind the proposed legislation believe that students who suffer financial strain based on these loans should not suffer more than individuals who have encountered debt problems with credit cards or vehicle loans. The proposed change would create a level of fairness within bankruptcy law, according to supporters.
For many in Maryland, the realities of crippling student loan debt are all-too-familiar. The need for debt relief is often far too pronounced to wait for relief through changes to existing bankruptcy law. For these consumers, it is important to understand that even though bankruptcy protection does not currently extend to student loan debt, the elimination of various other forms of debt can often make a significant difference in the lives of those who file.
Source: thinkadvisor.com, “Student Debt Could Be Discharged in Bankruptcy Under New House Bill”, Melanie Waddell, Jan. 22, 2015