Many Tennessee college students, as well as others throughout the country, wind up facing serious financial trouble when they cannot pay back their college loans. In the past, this type of debt has typically never been dischargeable through bankruptcy, unless a student could prove dire hardship, which, under the requirements, was difficult to do. A recently sponsored bipartisan bill seeks to change that.
Students would not have to prove extreme hardship after 10 years
In the bill sponsored by two senators, one a Democrat, the other a Republican, students wishing to file a bankruptcy petition to discharge college loan debt would not have to prove hardship after 10 years for federal loans. One of the senators stated that many students were duped into taking on loans they were in no position to pay back by profit-hungry college administrators who misled them. The senator further stated that the bill will provide students who have no way to pay back their loans a means of starting afresh in life.
Private loans would still carry a hardship clause
Under the new bill, students who secured private loans for college would still have the option of proving undue hardship in order to qualify for bankruptcy. The bill would also require colleges with 1/3 of their student bodies receiving loans to pay back the government for federal loans that are discharged through student bankruptcy. Many people believe that the bill has a good chance of passing through both houses, particularly because of its bipartisanship.
Students are not the only ones who sometimes need bankruptcy
While many Tennessee college graduates who have been struggling financially may be hoping that the recently launched bill passes into law, there are other people who are also seeking debt relief who may qualify for bankruptcy. Filing for bankruptcy is not a one-size-fits-all solution. There are several types, each with unique eligibility requirements, which is why it is helpful to speak with someone well-versed in bankruptcy law to determine which option might be most viable in a specific set of circumstances.