Oak Park Real Estate & Estate Planning Blog

Anyone who is considering the possibility of filing for consumer bankruptcy in light of the new guidance from the Biden administration and the U.S. Department of Justice should learn more about what is involved in the process of seeking a discharge of student loan debt in bankruptcy. You should get in touch with one of our Oak Park bankruptcy attorneys to find out more about having student loans discharged in bankruptcy given your particular circumstances. In the meantime, the following are some of the top things for you to consider about student loans and bankruptcy. New Guidance Has Been Issued As we noted above, new guidance on discharging student loans in bankruptcy has been issued. Specifically, the new guidance addresses the process for a debtor to seek to have student loans discharged, and the process by which the Department of Justice and Department of Education will determine the debtor’s eligibility for a discharge. Most significantly, the process will now involve an “attes...

If you have student loan debt and you have been considering bankruptcy , you may already know that the U.S. Department of Justice (DOJ) recently issued new guidance concerning the discharge of student loan debt. Given that there has been a significant amount of discussion about amending the way that student loan debt is handled in bankruptcy cases, it is critical to understand that the new guidance does not change the overall process for discharging student loan debt in bankruptcy. To be clear, the requirement of proving an “undue hardship” still exists, but the DOJ has clarified some of the elements of the process and has made some changes to the way it will approach the issue of student loan debt. Our Oak Park bankruptcy attorneys can provide you with more information about how the new guidance could impact student loan discharges in bankruptcy (including your student loan debt if you are considering bankruptcy). Debtors Still Need to Prove an Undue Hardship The new guidance does no...

If you are struggling with student loan debt and have been wondering if you could be eligible to have that debt discharged in a consumer bankruptcy proceeding , you are not alone. Debtors across Oak Park and throughout the Chicago area have substantial student loan debt that makes it difficult to or even impossible to live a comfortable life. For many people with student loan debt, even federal loans can be difficult to repay, and forgiveness programs are difficult to understand and to navigate. While you may be considering personal bankruptcy, you also may know that it has traditionally been quite difficult to have student loan debt discharged in a bankruptcy case. Debtors need to pass a test that shows they have made a good faith attempt to repay their student loans, and that continuing to have the student loan debt would create a great hardship. Recognizing the difficulty of discharging student loan debt in bankruptcy —and the need to make this process easier—consumer advocates an...

Many Americans across the country are struggling to repay student loan debt, and many are dealing with unfair debt collection practices tied to student loans. Consumers with student loan debt vary widely in terms of age, with some debtors in their early 20s who recently graduated from college to older Americans who are working to pay off loan balances of tens of thousands of dollars—and sometimes much more—in student loan debt. While consumer bankruptcy rules could change to make it easier for people with student loan debt to receive a discharge in personal bankruptcy, until that point, people with student loan debt continue to struggle. According to a recent article in The New York Times , for some people, student loan debt might not even be the worst of it. Some people have what are known as “income share agreements,” or “ISAs.” For some student borrowers, this alternative to taking out additional student loans can be enticing. However, for some students, choosing an ISA over a ...

It is no secret that student loan debt has become a serious problem in Illinois and throughout the country. For example, a report in Forbes reported on the “student loan default crisis” earlier this year, citing the total of student loan debt at approximately $1.4 trillion. The article described student loans as “a problem of out-of-control ballooning debt” that may soon lead to a default crisis. Are current bankruptcy laws to blame for a potential student loan default crisis in which thousands of borrowers simply stop making payments due to financial circumstances, leading to a larger economic crisis? According to a recent article in The Cap Times , some consumer advocates believe that shifts in U.S. bankruptcy laws have narrowed options for student loan borrowers in need of bankruptcy protection. Historical Changes to U.S. Bankruptcy Law The article suggests that a “series of incremental changes to federal bankruptcy laws” are to blame for making it “nearl...

Consumer protections for student loan borrowers are not just for younger adults who have graduated recently from an undergraduate institution or from a graduate program. Protection from abusive lending practices concerning loans actually extends beyond adults who have gone back to school to complete a degree or to earn an advanced degree. According to a recent article in the Chicago Tribune , many senior citizens are in need of protection from harmful debt collection practices for student loans. You might be asking yourself, are a lot of elderly residents of Chicago going back to school and taking out loans? In general, the answer to that question is no. Rather, many of the older borrowers who are facing significant student loan debt have taken out the loans for their children and grandchildren. The article refers to this segment of the borrowing population as “the fastest-growing category of student loan debtors.” Do the same protections against unfair and deceptive lendin...

For quite some time, commentators and consumer protection advocates have voiced concerns about student loan debt . According to a recent report from CNBC , student subprime debt has risen drastically over the last year, contributing to the trillions of dollars of student debt throughout the country. As an article in MarketWatch explains, some student borrowers, especially those who took out student loans to pay for for-profit colleges, may be more similar than we might think to “homeowners who used shady mortgage products to finance their homes in the lead up to the housing crash.” Indeed, “borrowers who took out student loans to attend for-profit schools defaulted at the same or higher rate within five years as those with subprime mortgages.” Now that the numbers reflect a surge in student subprime debt, what can we expect for borrowers who owe money on these loans? Is personal bankruptcy ever an option for student loan debt? Student Loan Debt Rises While Creditw...

Over the last decade, the financial burden of student loan debt has become a major topic for consumer advocates. With trillions of dollars in student loan debt outstanding across the country, many consumers have difficulty making student loan payments, particularly when they are dealing with private loans that do not have income-based repayment options. Who is protecting consumers in Oak Park and other parts of the U.S. when it comes to predatory student lending practices? According to a recent article from Inside Higher Ed , the Consumer Financial Protection Bureau (CFPB) has emerged not just as a general regulator of deceptive lending practices , but of student lending practices more specifically. Since its launch in 2011, the CFPB has taken a number of steps to help limit harmful lending practices when it comes to student borrowers. CFPB Offers Enforcement Role in Student Lending As the article explains, the CFPB arose out of the financial crisis with a mand...

When you apply for student loans , what do you need to know about the typical sixth-month grace period that comes with federal loans (and some other private loans)? According to a recent CNBC article , that grace period could end up costing you a lot of extra money in the long run. For some borrowers, it might make sense to take advantage of the grace period. For other borrowers, however, avoiding payments during the grace period can result in more debt later on, potentially putting you in a difficult financial situation. Keep in mind that it is extremely difficult to discharge student loans in bankruptcy in the event that you cannot make your regular payments. What do you need to know in order to make an informed decision? Limitations of the Student Loan Grace Period In short, if your student loans will accrue interest during the grace period, you may be better off making additional payments if you can. The only two types of federal loans that do not accrue interest ...