On behalf of Law Offices of Mark M. Kratter, LLC on March 22, 2012
Many Connecticut residents may know firsthand the stress associated with a large debt burden. Indeed, it may feel overwhelming, if not paralyzing. Fortunately, though, U.S. federal law allows for debtors to escape from their debt burden by filing for bankruptcy.
Of course, a personal bankruptcy does not necessarily permit someone to totally escape his or her debt. Rather, it allows them to gain control over it, putting them back on the path toward financial independence under the protection of a court. Yet, one form of debt is notoriously difficult to discharge, and more families than ever are suffering from it: student debt.
A decade ago, the total amount of Parent PLUS loans, which are low-interest education loans guaranteed by the federal government and taken out by parents, was $3.7 billion. However, that number has almost tripled since then to $10.4 billion. Overall, the amount of student loan disbursements in 2011 was $102 billion, and the debt burden may well be increasing. That is because tuition and fees at state colleges for in-state students have increased by an average of 5.6 percent each year after subtracting for inflation. This year, the average increase was 8.3 percent.
Even in the best of times, student loan debt may be difficult to manage for many Connecticut families. But in these tough economic times, many families have found themselves facing financial hardship after being saddled with student loans in addition to unemployment or a mortgage that is underwater. Yet, filing for bankruptcy does not necessarily allow debtors to discharge their student debt, which is treated rather uniquely in the Bankruptcy Code. Nevertheless, those debtors able to file for bankruptcy may be able to discharge or reduce their other debt burdens, making it easier to gain control over the student debt.
Source: The Arizona Republic, "College debt especially costly for parents," Anne Ryman, March 17, 2012
