With skyrocketing education costs, student loan debt has become the new normal for many Americans. Current laws make it very difficult to discharge any amount of student loan debt in a chapter 7 or 13 bankruptcy. The American Bankruptcy Institute (“ABI”) published a legislative update from the ABI’s Consumer Bankruptcy Committee titled “Student Loans and Bankruptcy: Recommendations for Reform,” which was presented to the Commission on Consumer Bankruptcy by Elizabeth Stephens.
The article suggests way in which the bankruptcy process can aid the unfortunate student loan debtor. The committee highlights how student loan debtors need more access to legal advice and gives recommendation for procedures that can be developed, as well as insight for two bills that are currently pending. “With the high default rate on this debt and the need to preserve this important resource for future students, it is time to explore options for dealing successfully with student loan debt in bankruptcy proceedings,” said ABI’s Consumer Bankruptcy Committee.