While the Scottsdale economy is
trying to recover from the damage of a mortgage crisis, another huge threat to
the economy is looming ever closer. The National Association of Consumer
Bankruptcy Attorneys recently referred to the national student loan as a debt
bomb. In the previous month, the Federal
Reserve Bank of New York stated that the total student- loan had amounted to $870
billion. The loan amount is not about to get any lower as an average student
expected to graduate from school has a student loan of about $ 25,000.
When
filing for bankruptcy in Arizona, it is impossible to discharge student loans.
Any debtor ought to show hardship in repaying the loan and is only allowed to
do so if he/she indicates a deliberate effort to pay the loan for a specified
period of time or is unable to meet the stated demands due to hard economic conditions
that are uncontrollable.
But
how do student loans amount to a potential bankruptcy?
If
the Congress passes The Fairness for Struggling Students Act, it is possible to
change the loans from leading to a bankruptcy. This would permit students who
owe private lenders money to clear their student-loan debt when filing for
bankruptcy. Private loans have fewer consumer protections than government loans
and usually have higher and variable interest rates. Government loans are
exempted from this act as their characteristics are loan limits, interest-rate
caps, forbearance repayment when faced with economic hardships and have
income-based repayment plans.
Senator
Dick DurbinD-Ill sponsors the legislation and is the one who convened the
hearings about the student-loan issue. Deanne Loonin, a National Consumer Law
Center Attorney testifies in a report that the bankruptcy law in operation
treats individuals with student loans in a similar manner with people
struggling with alimony, child-support debts, criminal fines, and overdue
taxes.
Sally
Mae, a student loan lender is in support of the legislation that allows
discharge from bankruptcy for both private and federal students who have made
an effort to repay their loans for a period of about five to seven years and
are experiencing financial strains. Other people at the hearing thought that it
is unfair for the lending institutions which offered the funds to discharge the
borrowers. This in turn, leads to an increase in the cost of student-loans.
If
you have a student-loan debt and are struggling, do not hesitate to look with a
certified Tucson, Arizona attorney who deals with bankruptcy. The attorneys are
experienced in bankruptcy issues and will give you expert advice and help you
choose the best bankruptcy option for you.