Iuliano did some research and says a quarter-million student loan debtors file for bankruptcy each year. That also means more work for your lawyer.īut Iuliano says that this has created the misconception that it's nearly impossible to get help for student debt through bankruptcy. You need to meet what's called an "undue hardship" standard. Jason Iuliano, a Villanova University law professor, says that over the past 30 years, Congress has made it harder to discharge student debt. "And I was like, 'Well, but that doesn't make any sense.' " "They had told me things like you have to have a disability where you're not able to even work," she says. But if you reach that point, you can get your debts reduced or erased through bankruptcy so you can get back on your feet.īut the lawyers Lauren called said that with student loans it's different because there are special rules for student debt. Your credit gets destroyed for years, and you have to be in pretty dire financial straits for it to make sense. And bankruptcy can be a way to get help.īankruptcy is not fun. But many bankruptcy judges and legal scholars say that's wrong. Over the years, a myth has taken hold that you can't get student debt reduced or wiped out through bankruptcy. She doesn't want her last name used because she thinks all this might hurt her job prospects. So Lauren started to look into bankruptcy. I mean, my student loan payments were higher than my rent was." " 'I can't afford to actually pay my bills and eat and pay my rent,' " she remembers thinking. And by 2016, her loans had ballooned to about $200,000. For work, all she could find were retail jobs. She had private student loans with high interest rates. The Queens, N.Y., resident had graduated from college with an art degree as the Great Recession had hit. Now more judges and lawyers say that's a myth and bankruptcy can help.Ī few years ago, Lauren had a big problem. Many Americans who get overwhelmed by student loan debt are told that student debt can't be erased through bankruptcy.
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