Since 1998, student loans have been practically non-dischargeable through bankruptcy.
Change may be on the horizon.
A new bill may provide bankruptcy as a viable means to discharge your student loan debt. This would be the first bipartisan effort to mend the bankruptcy rules concerning student loans. Senator Richard Durbin (D-IL) and Senator John Cornyn (R-TX) are at the forefront of advocating this monumental bill. The discharge by bankruptcy was eradicated back in 1998 but the glooming mass of $1.56 trillion in student loan debt has finally caught the attention of Congressional minds.
Still at its early stages, the bill is coined The Fresh Start Through Bankruptcy Act of 2021. This new law would help borrowers receive a bankruptcy discharge of federal student loans. There will surely be many requirements. For instance, a 10 year waiting period after the student loan was issued may be a threshold requirement. For further details, a committee hearing where this matter was introduced is available here.
Don’t hold your breath just yet as Congress may take years to approve and implement these changes to the law. However, if this is applicable to you or someone you know the smart thing to do would be to keep this close on your radar. We can help you do that.