Many Tallahassee residents may already know that, generally speaking, student loan debts do not often get discharged in bankruptcy. This is a huge issue since, across the country, Americans have amassed $1.4 trillion in debt spread out among 44 million borrows across the country. Of this debt, over 10 percent is delinquent, that is, over 90 days overdue.
While the law is clear that student loans can only be discharged on account of undue hardship in repaying them, the federal government has to date not defined what this phrase means. As such, most of the federal courts in the country, including the courts in Florida, have adopted a very strict test that basically requires a person to approach destitution before being able to claim undue hardship.
Perhaps because this test is so strict, only about 1 in 1,000 of those who file for bankruptcy even attempt to get their student loan debt discharged. Instead, the opt to pay off that debt after hopefully saving some money on credit card payments, medical bills and other debts that a person can be more easily discharged from. Even though the vast majority of people elect not to even try to get their student loans discharged, less half of those who do try to get such loans discharged actually succeed in doing so.
There are currently movements both in Congress and within the Administration to define what undue hardship actually is, and that definition could mean that Floridians who have been struggling under the weight of student loan debt will have a better shot at getting relief through the process of personal bankruptcy.
In the meantime, though, a bankruptcy attorney can help Tallahassee residents who are having financial struggles work out the best strategy for dealing with student loan debt.