While in the majority of cases a Chapter 7 bankruptcy cannot discharge student loan debt, that does not mean that bankruptcy cannot relieve financial pressure made worse by your student debt. According to Business Insider, a recent study showed 32% of Chapter 7 bankruptcy consumers had student loan debt and that on average, that student loan debt made up nearly half the total debt amount.
So why is student debt such a problem, and how can filing for bankruptcy help?
The burden of student loans
In 2019, national student loan debt hit $1.5 trillion, a record high. Not only is the cost of higher education around 300% higher for students now than it was for their parents, but the cost of living has also jumped significantly while wage growth has been slow. The combination puts millennials at a distinct financial disadvantage. Many struggle to make ends meet while trying to meet their debt obligations. If you find yourself with mounting debt on top of student loans, you may want to look at options for financial help.
How bankruptcy can help
Only in rare circumstances can a Chapter 7 bankruptcy discharge student loan debt, but a bankruptcy can discharge other debts and alleviate financial pressure that is too great. If you have unsecured debts like credit card debt, you may be able to discharge a significant amount of your total debt, freeing up money to pay down your student loans more quickly. This can be particularly helpful if you are in the early stages of your career and are likely to see your income rise post bankruptcy.