The Wall Street Journal reported today that Sen. Durbin will introduce new legislation today that would make private student loans dis-chargeable in bankruptcy. As a general matter, student loans are not currently dis-chargeable. Under this legislation, public loans would still survive bankruptcy, but privately issued loans, which often carry higher interest rates and less terms, might be wiped out.
Relief from other debt in bankruptcy already makes student loans more affordable, and bankruptcy can put student loan creditors on hold even when the debts are not discharge-able. If intervening law changes, a Chapter 13 bankruptcy might potentially be dismissed and re-filed, or re-filed under another Chapter, to take advantage of more reasonable future laws. Contact us if you would like a free consultation to discuss how to manage debts that include student loan obligations.
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