It is no secret that many people in St. Petersburg are struggling with crushing student loan debt that is keeping them from reaching certain life milestones. In general, it is almost impossible to have student loan debt discharged through the Chapter 7 or Chapter 13 bankruptcy process. However, one bill has been introduced in Congress that would offer greater bankruptcy protections to student loan borrowers.
Chapter 10 bankruptcy for student loans
The bill, referred to as the Consumer Bankruptcy Reform Act of 2020 would create a new chapter in the bankruptcy code, Chapter 10. This chapter would treat student loans like other types of consumer debt such as credit card debt or medical debt for which a borrower can seek to have discharged through bankruptcy.
Filing for bankruptcy can lead to a brighter financial future
Filing for bankruptcy can keep a person afloat financially, ultimately allowing them to move forward on brighter financial footing. However, it is important to note that if you file for bankruptcy, this will affect your credit score for at least seven years, making it more difficult to obtain other types of loans. Even so, many student loan borrowers may find filing for bankruptcy to be the best option to overcome debts that they have no means for ever paying back.
Seek help if you want to file for bankruptcy
As of right now, this bill is just that — a bill. Current law on bankruptcy and student loans still stands. Filing for bankruptcy can still help student loan borrowers, as it can free up income that can be used to pay back student loans. This post does not offer legal advice and should not form the basis of any bankruptcy filing. Bankruptcy attorneys in St. Petersburg understand the concerns debtors face and may be able to help.