The incoming administration has brightened the hopes of many former Pennsylvania college students who borrowed money to achieve educational success. As a matter of fact, many who accrued debt and did not graduate could also benefit from this watershed shift from previous educational funding policy. For those who were able to complete their program of work, what earning a degree did for many students is leave them with a mountain of student loan debt that they must now pay down for many years to come. Their hopes of some relief from this burden could very well be right around the corner, but many will still need to file for bankruptcy.
How the bankruptcy law could change as well
Not only has the new administration shown some agreement with the new concept of student loan debt forgiveness, but there is actually a legislative bill now sitting in Congress that could allow students to include student debt in a Chapter 10 bankruptcy filing. This could make student loan debt the equivalent of unsecured credit card debt, and especially if it is discharged similarly to a Chapter 7 bankruptcy. Bankruptcy law has historically made it difficult to discharge these obligations.
What the new bankruptcy chapter means for those with college loan debt
Passage of the proposed legislation will assuredly fuel a spike in bankruptcy filings for those wanting to take advantage of the new law. While it will still leave the stigma of bankruptcy and future credit record restrictions, the alternative could be much worse for those requesting bankruptcy protection. An approved petition could result in restructuring personal finances for rebuilding their life in a more expedient manner.
Bankruptcy lawyers will advise that students should thoroughly evaluate their decision to file bankruptcy if the legislation is passed because it still may contain the same negative aspects. In addition, the rules may be extensive and necessitate legal representation from an experienced attorney who is knowledgeable in how the new Chapter 10 filings will impact personal credit ratings going forward.