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Lawmakers propose bill to allow discharging student debt

On Behalf of | May 14, 2019 | Bankruptcy

Texas residents who are struggling with unmanageable student loan debt might be able to get some relief if a proposed bill is passed by Congress. The legislation has backers from both the Republican and Democratic parties.

Called the Student Borrower Bankruptcy Relief Act, the bill would make it easier for people to discharge their student loan debts in bankruptcy. Under current law, it is nearly impossible for people to do so. People who are unable to repay their student loans may be burdened by them for the rest of their lives.

In the 1970s, student loans were fully dischargeable. Lawmakers added a stipulation at the end of that decade that borrowers had to wait five years after beginning to pay them off before they could discharge their loans. In 1990, the waiting period was increased to seven years. Congress later changed the law to make student loans dischargeable only if borrowers could prove that the loans created an undue hardship for them. The new bill would restore the ability of people to discharge both federal and private student loans.

People who are facing overwhelming debt might want to talk to experienced bankruptcy attorneys who can assess the financial circumstances of their clients and advise them about the options that they might have available to them. If the clients decide to move forward with bankruptcy petitions, the attorneys may assist them with gathering all of the documents that they will need and with completing all of the forms and schedules. The attorneys may file the petitions on behalf of their clients and represent them throughout the bankruptcy process.

Source: CNBC, “It could become easier for people with student debt to file for bankruptcy“, Annie Nova, May 11, 2019