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Student loan issues in the news do not modify bankruptcy law

A great deal of discussion over student loan debt has made the news in recent weeks. Interest rates on loans that may be granted in the near future have been at issue in political circles, but that issue does not affect the 37 million Americans that are estimated to have outstanding student loan debt. Generally, student loans are not dischargeable in bankruptcy.

The federal bankruptcy laws place student loans in a special category of consumer debt that makes the loans very difficult to discharge. As this blog has reported, student loan debt exceeds credit card debt in the United States. Some advocates have called on Congress to change the bankruptcy laws to put student loans on an even playing field to other forms of consumer debt.

The Associated Press and the Times-Dispatch recently ran a story that highlights the personal effect that the bankruptcy laws can have on individual consumers. An Ohio couple suffered a series of setbacks recently that placed the couple in financial straits.

Cincinnati bankruptcy lawyers know that unexpected events can often lead to financial stress--and in the recent economy, that idea may even be compounded.

The Sandusky couple took on debt in college, like many across the country. The woman had lost her scholarship and had to take on student debt to get through college. The man in the relationship also incurred student loan debt in pursuit of his degree.

Then medical expenses arose. The two schoolteachers bought a house, but the U.S. economy tanked. The convergence of economic and medical struggles combined to bring the schoolteachers to bankruptcy. Unfortunately, under current law, the student loan debt cannot be discharged in bankruptcy to give the Ohio couple a true fresh start.

The troubling story highlights the plight of many in Ohio, and although the couple is going through it on their own, they really are not all that alone in the bigger picture.

The Ohio couple, like many in similar circumstances, reportedly are seeking bankruptcy protection to find meaningful debt relief in the other available areas of consumer debt.

Many people find that, although student loans may not currently be dischargeable, bankruptcy can still provide meaningful debt relief in tough economic times.

Source: The Times-Dispatch, "Bankruptcy can't erase student loan debt," Associated Press, April 26, 2012

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