Oak Park Real Estate & Estate Planning Blog

The amount of money necessary to obtain a college education has been high for many years, and it has only continued to increase over the past three decades. Indeed, according to a recent article in Forbes , more than 50%of all college students now leave their institution with student loan debt, and Americans currently owe a total of about $1.75 trillion in both federal and private student loans. The average amount of debt per borrower is nearly $29,000, but the average loan balance in Illinois and a handful of other states is significantly higher. On average, debtors in Illinois currently have student loans over an average of more than $37,000. Now that the U.S. Supreme Court has struck down President Biden’s plan to cancel anywhere from $10,000 to $20,000 of student loan debt per borrower, many debtors are now considering other options. Given that it may now be easier to have student loans discharged in bankruptcy, our Oak Park bankruptcy lawyers want to discuss your options. We can ...

Anyone in the Oak Park area who is considering personal bankruptcy to have student loans discharged should be aware that there is new guidance that will impact bankruptcy cases involving student loans. If you previously considered bankruptcy in order to have your student loans discharged, you likely came across a range of articles providing information about the difficulty — but not impossibility — of having student loans discharged in bankruptcy. For quite some time, student loans have been famously difficult to discharge in consumer bankruptcy cases, but at the same time, few consumers filing for bankruptcy have actually gone through the process that was required to see if their student loans could be discharged. That process was notoriously complex, costly, and time-consuming, requiring debtors to prove an “undue hardship” requirement. That undue hardship requirement largely required proving elements of what has become known as the Brunner test to show that continuing to pay stude...

Are you considering bankruptcy and wondering whether you could be eligible to have your student loans discharged in bankruptcy? Millions of Americans currently have student loan debt. In fact, according to Best Colleges , at the end of 2022, approximately 43.5 million Americans had federal student loan debt, which is about 13 percent of the U.S. population. Of those with federal student loan debt, a majority owe between $20,000 and $40,000. Those figures do not include Americans who currently have private student loan debt and who are struggling to make those payments. While federal student loan payments have been paused since 2020, payments are scheduled to resume in 2023, and many debtors are concerned about how they will be able to afford the payments. If you want to have your student loans discharged in bankruptcy, what will you need to do? Our Oak Park bankruptcy lawyers can provide you with more information about the steps you will need to take and how the recent guidance could...

If you have had your student loan debt discharged through a Chapter 7 or Chapter 13 consumer bankruptcy case , the creditor is not permitted to continue making attempts to collect that debt. To be sure, you are no longer liable for a debt that has been discharged in bankruptcy, and creditors and debt collectors cannot try to hold you liable for discharged debts. However, according to a recent article in MarketWatch , the Consumer Financial Protection Bureau (CFPB) recently acknowledged that lenders are violating the law by collecting student loan debt that has already been discharged in bankruptcy. The CFPB is now telling lenders that they need to repay consumers who have made payments on discharged student loan debts. Our Oak Park consumer bankruptcy lawyers can tell you more. Learning More About Unfair Practices By Student Loan Lenders According to the article, “for years, borrowers have been going to court claiming that student loan companies were illegally collecting on debt they h...

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 have been following recent news concerning the Biden administration’s policy guidance for the U.S. Department of Justice (DOJ) and the memo issued by the DOJ about discharging student loans in bankruptcy , you probably know already that the process of discharging student loan debt in bankruptcy is supposed to be changed soon. While the “undue hardship” requirements to discharge student loans in bankruptcy will not change, the DOJ plans to streamline parts of the bankruptcy process so that more student loans are likely to be discharged in a personal bankruptcy case. According to a recent article in Forbes , the DOJ has “updated a key application form under [the] new process,” which suggests that bankruptcy filers could soon be able to have their student loan debt discharged in bankruptcy without many of the procedural difficulties that existed previously. What does this news from Forbes about the application form involve? Our Oak Park bankruptcy attorne...

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 currently have student loan debt and you are considering the possibility of consumer bankruptcy , you should know that the U.S. Department of Justice (DOJ) recently announced a new process for discharging student loans. According to an article in The New York Times , working with the U.S. Department of Education (DOE), the DOJ “announced a new process that it said would help ensure that people in bankruptcy seeking relief on their federal student loans were treated more fairly, with clearer guidelines about what types of cases would result in a discharge.” Does this shift mean that more bankruptcy discharges will involve student loans, and more consumers with student debt will be able to wipe out that debt in Chapter 7 bankruptcy cases? It might, but it will depend on how many current student loan borrowers are actually eligible to have their student debt discharged under the existing bankruptcy system. Our Oak Park bankruptcy attorneys can say more. New Approach Will Provide Cl...

Are some student loan companies attempting to collect debt that has been discharged in consumer bankruptcy cases? According to a recent article in Business Insider , the Consumer Financial Protection Bureau (CFPB) reported that “student loan companies have been accused of violating discharge orders and unlawfully collecting debt,” which should put consumers on alert if they have received a debt discharge through bankruptcy. To be clear, discharged debt is not owed, and creditors cannot attempt to collect it. What else do you need to know? Our Oak Park bankruptcy lawyers have information to help. Learning More About Student Loan Companies Attempting to Collect Discharged Debt The recent report from the CFPB underscored that student loan debt can in fact be discharged in bankruptcy despite the frequently repeated misconception that student loan debt cannot be discharged. To be clear, while student loan debt can be more difficult to discharge than some other types of consumer debt, it c...

While federal student loan payments remain paused, many consumers may not be thinking about how their financial circumstances will be affected once those student loan payments resume. Yet it is important to consider federal student loan payments in relation to the rest of your debt, especially if you are struggling to make payments on medical debt, credit cards, and your car or mortgage payment. Moreover, consumers with private student loans have not had their payments paused, and many are struggling to make those regular student loan payments. Can consumers with federal or private student loans get those student loans discharged in bankruptcy ? The following are some of the top things you should know about student loans and consumer bankruptcy . Student Loans are Not One of the Types of Non-Dischargeable Debts Many people have misconceptions about student loan debt and the bankruptcy process. Indeed, many consumers mistakenly assume that student loans are one of the types of debts tha...

If you owe a significant amount of debt and a portion of that debt includes federal student loans, you may be able to more easily have that debt discharged by filing for personal bankruptcy . According to a recent article in The Washington Post , a student financial aid point person for the U.S. Department of Education informed Congress “that the agency is working with the Justice Department to revise its bankruptcy policy for federal student loans.” This could mean that debtors who are struggling largely with student loan debt may soon be able to avoid the complicated process of seeking to have that debt discharged in bankruptcy even if there is not an overhaul of U.S. bankruptcy law. Changing the Approach to Student Loan Debt According to Richard Cordray, the current chief operating officer of the Office of Federal Student Aid, the current process for seeking a discharge of student loan debt in bankruptcy “doesn’t work well” and “needs to be reformed.” Speaking before a House educa...

Are you thinking about filing for Chapter 7 or Chapter 13 bankruptcy , and are you wondering about types of debt you have and whether they are dischargeable? While there are some types of debt that are not dischargeable in consumer bankruptcy cases, there are many forms of commonly held debt that can be discharged in your bankruptcy case. If you have questions, you should always seek advice from a bankruptcy lawyer who can help you. In the meantime, the following are examples of some of the most common types of debt that are dischargeable in personal bankruptcy cases under the U.S. Bankruptcy Code . Credit Card Debt Did you know that more than 191 million Americans currently have credit cards and that millions of households are currently carrying tens of thousands of dollars in credit card debt? According to Debt.org, credit card debt is one of the most common forms of consumer debt, and it is nearly always dischargeable in a bankruptcy case. While there are some exceptions when a ...

If you have student loans and are considering the option of filing for bankruptcy because you cannot manage the debt, you are not alone. Millions of Americans are struggling with student loan payments, yet few decide to file for bankruptcy in order to discharge those loans because of the common perception that student loans are difficult or impossible to discharge in bankruptcy. It is certainly true that student loans are not as easy to discharge as other types of debt, it is possible to have student loans discharged in a Chapter 7 or Chapter 13 bankruptcy case. A recent federal court decision suggests that it may get even easier to have certain student loans discharged in a personal bankruptcy case. Indeed, a recent decision from the Second Circuit Court of Appeals held that “private student loans are not protected from discharge in bankruptcy,” according to an article in Reuters . While that federal court opinion occurred outside the circuit governing cases in Illinois, it may b...

If you have student loan debt and are struggling to make your payments, it is critical to know that you could be targeted by a student loan debt relief scam. Receiving a call or another form of contact from an alleged student loan debt relief organization can feel particularly welcome for many Americans, especially if you have recently read or heard that student loans can be difficult to discharge in a consumer bankruptcy case. Yet student loan debt relief companies may not be able to keep the promises they make to consumers, and they can ultimately cost you more money and stress in the long run. Our experienced Oak Park consumer protection lawyers want to discuss a recent action taken by the Consumer Financial Protection Bureau (CFPB) against operators of an unlawful student loan debt relief company, and to tell you more about your options for managing student loan debt through bankruptcy and otherwise. It is a common misconception that there are no options to discharge student lo...

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...

Debtors in Oak Park who are considering personal bankruptcy to discharge student loans should learn more about a recent bankruptcy case in New York. Although this case is not binding in Illinois, it demonstrates that bankruptcy judges are thinking about the “undue hardship” requirement in more flexible ways, allowing debtors to discharge student loan debt in a Chapter 7 bankruptcy case. According to a recent article in Forbes , this bankruptcy case involving the discharge of student loan debt could be a sign that bankruptcy courts across the country will begin looking at student debt a bit differently in Chapter 7 bankruptcy cases. Let us tell you more about the case. Chapter 7 Bankruptcy Case Involves Discharge of $221,000 in Student Loans The recent bankruptcy case discussed in Forbes involved the discharged of $221,000 in student loan debt. Many debtors in Illinois and across the country have heard that it is difficult—and maybe even impossible—to discharge student loan debt in...

If you currently are struggling to repay student loan debt, you may know that you are not alone. With student loan debt totaling approximately $1.5 trillion dollars and 45 million borrowers in the U.S., many people who are having difficulty managing student loan debt want to know if they should file for consumer bankruptcy . Indeed, as an article in Forbes underscores, student loan debt currently is “the second highest consumer debt category—behind only mortgage debt—and higher than both credit cards and auto loans.” At the same time, however, many consumers who are grappling with student loan debt have heard that discharging student loans in bankruptcy can be difficult or even impossible. A recent report from U.S. News & World Report considers student loans and bankruptcy, and discusses situations in which debtors should consider filing for personal bankruptcy in order to discharge student loans. It is a Myth That Student Loans Cannot be Discharged in Bankruptcy The recent re...

The U.S. Department of Education (DOE) has been relying on private debt collection companies to collect unpaid or overdue student loan debt, and many consumers have experienced problems with those debt collection companies and their tactics. In some cases, consumers have alleged that the private debt collecting firms contracting with the DOE have engaged in unlawful debt collection practices in violation of the Fair Debt Collection Practices Act (FDCPA). According to a recent article in The Wall Street Journal , a federal judge just “cleared the way for the Education Department to stop using private debt collectors and revamp the way it handles overdue student loans.” What do debtors in Illinois need to know about the recent federal case and its impact on debt collection practices? Plans to Change the Scope of Student Loan Servicing If the DOE no longer plans to rely on private debt collection companies to recoup money owed by student debtors, what does it plan to do instead? As t...

Could U.S. Bankruptcy courts in Illinois learn from a new bankruptcy program in Florida that is designed to help student loan debtors ? According to a recent article in the Orlando Sentinel, the U.S. Bankruptcy Court for the Middle District of Florida has developed a program for consumers with student loan debt who have filed for Chapter 13 bankruptcy . The program is designed to facilitate communication between the debtor and the lender so that the debtor can work out a modified student loan repayment plan as part of the Chapter 13 bankruptcy case. While this program is only available currently to debtors in Florida, we want to discuss it because a similar program ultimately may be able to help struggling student loan borrowers in the Chicago area. Purposes of the Student Loan Modification Program The student loan modification program, or SLM Program , will take effect for eligible debtors on August 1, 2019. According to the administrative order prescribing procedures for the pro...

Is Chapter 7 bankruptcy currently the best decision in a situation in which a large percentage of debt is made up of student loans? A recent article in Diverse Education highlighted the fact that it is often difficult to have student loans discharged in Chapter 7 bankruptcy, and that a large percentage of debtors with student loan debt do not actually end up with the financial “fresh start” that liquidation bankruptcy typically promises. As the article points out, for those debtors with student loan debt who recently filed for bankruptcy, on average student loan debt made up about 49% of the debt. For a majority of those debtors, student loan debt remained after the Chapter 7 bankruptcy discharge . Given that student loan debt is making up a larger percentage of debt in liquidation bankruptcy cases and frequently is not being discharged, consumer protection advocates are asking whether Chapter 7 bankruptcy can really provide a “fresh start” without a change to the bankruptcy rules...