Why Can’t I Discharge My Diploma?
A San Jose bankruptcy attorney discuss student loans and bankruptcy
Prior to the dramatic change in bankruptcy law in 2005 with the adoption of the Bankruptcy Abuse Prevention and Consumer Act (BAPCPA), private student loans could be discharged in bankruptcy. However, post-BAPCPA law very rarely allows for any kind of student loan, government-backed or private, to be discharged in bankruptcy. Thankfully, a few legislators have stepped up and taken initiative against this change by proposing that once again private student loans can be discharged through bankruptcy.
Private student loans can carry an interest rate of fifteen percent (15%) and higher. Student loans, unlike most other loans, do not become ripe until the student either graduates or leaves school. Interest is charged on the principal balance however throughout the entire time the student is attending school. With the rising costs of the University system in California and the decreasing availability of well-paying jobs, more and more people are deterred from continuing education either after high school or post-graduate education. A law student will likely graduate with $100,000 or higher in student loans with no guarantee of a decent paying job following graduation.
Under the current law, BAPCPA allows for Chapter 7 debtor to receive a full discharge on their unsecured debt; however certain debts such as spousal support, child support, student loans, and most tax debt are not dischargeable. Proponents for the new legislation on student loans argue that student loans are like other dischargeable debt in that they do not directly contribute to one’s wellbeing. Advocates for the new legislation argue that allowing private funded student loans to be discharged will decrease a lender’s security and force them to charge higher interest rates and fees to cover the potential for lost income.
If you have questions regarding Bankruptcy in San Jose please contact us at 408.279.2288 for a free consultation or visit www.bkanswers.com and we can connect you with one of our experienced San Jose Bankruptcy Attorneys. After you have spoken with one of our downtown San Jose bankruptcy attorneys, we can schedule you for a free face to face appointment in an office location nearest you. Our team of San Jose Bankruptcy Lawyers can assist you with all aspects of your bankruptcy or bankruptcy litigation case. If you have questions about filing a Chapter 7 bankruptcy, a Chapter 11 bankruptcy, a Chapter 13 bankruptcy, or would like to learn more about bankruptcy litigation, legal debt settlement, mortgage modification, lien stripping, cram down, stopping a foreclosure, wage garnishment, asset protection, discharging a debt, etc. we can help! We have bankruptcy attorneys located throughout California and Oregon who can assist you with all of your debt resolution questions. Please feel free to complete our free online bankruptcy evaluation and we can quickly determine if you are a qualified candidate for bankruptcy. We look forward to hearing from you, San Jose and the South Bay!
