Discharging Student Loans

More than 40 million people in the US are currently carrying the burden of student loans, averaging 4 loans and $29,000 in total. This has pushed the national student loan debt to $1.2 trillion, an 84% jump since 2008. In Texas, the average amount is $25,244 with 59% of non-profit and public college graduates in 2013 in debt.

That doesn’t seem so bad provided that you find a good job and avoid other debts such as home mortgages, car loans, and credit cards. Paying off a student loan should be your priority because as, a bankruptcy attorney in Waco, Texas may tell you, this kind of debt is non-dischargeable in bankruptcy and default carries heavy consequences. You are considered delinquent on the first day you miss a payment, and if you remain delinquent for nine months, you are in default and liable not only for the arrears but also collection and other fees.

Being in default on your student loan will affect your credit rating, making it difficult for you to borrow in the future. You may also get sued and your professional license (if any) revoked. The Department of Education may also collect payment (with some restrictions) by garnishing your:

  • Tax refunds
  • Wages and salaries
  • Federal benefits

Overall, if you can at all manage it, it makes better sense to pay your student loans or at least make a good faith effort to do so. It will save you a lot of trouble and complications later on. A history of intermittent payments is better than no payment at all, and unless paying your student loan will impose severe hardship on you, you can’t hope to discharge your student loans by filing bankruptcy.

If you do qualify for student loan discharge under bankruptcy, you will need help in convincing the court that this is so. It would be advisable to consult with an experienced bankruptcy lawyer in such cases.