A new study has found that the success rate for student loan borrowers who attempt to discharge their debt in bankruptcy has increased significantly in recent years. The study, published in The American Bankruptcy Law Journal, analyzed 652 bankruptcy discharge cases from October 2022 to November 2023 and found that 87% of student loan borrowers were successful in discharging their debt. This is a significant increase from 2017, when the success rate was 61%, and 2007, when it was 40%.<\/p>\n
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The improved outcomes for student loan borrowers in bankruptcy can be attributed, in part, to updated bankruptcy guidelines issued by the Biden administration in November 2022. The new policy allows borrowers to fill out a 15-page attestation form, detailing their financial struggles and making their case for a discharge. This streamlined process has made it easier for borrowers to navigate the bankruptcy system and increase their chances of discharging their debt.<\/p>\n
According to Jason Iuliano, a professor at the University of Utah’s S.J. Quinney College of Law and author of the study, “People who file for discharge are winning at very high rates.” Iuliano’s study found that women made up 73% of the student loan bankruptcy filers, and the average student loan balance for the filers was $115,000.<\/p>\n
The idea that student debt is impossible to discharge in bankruptcy is a common myth. However, the data suggests that this is not the case. While it is true that student loan debt is more difficult to discharge than other types of debt, it is not impossible. In fact, the study found that many borrowers who file for bankruptcy are able to discharge their student loan debt.<\/p>\n
Malissa Giles, a bankruptcy attorney in Virginia, notes that the easier bankruptcy process has been “life-changing” for her clients, many of whom have carried their student debt for decades. “It allows them to sleep at night,” she said.<\/p>\n
The easier bankruptcy process may offer a lifeline to many Americans struggling with education debt. With over 42 million Americans holding student loans and the outstanding debt exceeding $1.6 trillion, the need for a viable solution is clear. The study found that more than 3 million student loan borrowers filed for bankruptcy between 2011 and 2024, but only 7,293 of those individuals took the additional step of requesting a student loan discharge.<\/p>\n
According to Iuliano, “The myth that student loans are never dischargeable in bankruptcy is so pervasive that many attorneys never even raise the possibility with their clients.” However, with the new attestation process, bankruptcy attorneys should be recommending it to every client with student loans.<\/p>\n
The study’s findings suggest that bankruptcy can be a viable option for student loan borrowers who are struggling to repay their debt. With the updated bankruptcy guidelines and the streamlined attestation process, borrowers may be able to discharge their debt and start fresh. For more information, read the full article Here<\/a><\/p>\n If you are struggling with student loan debt, it’s essential to explore all available options, including bankruptcy, and to consult with a qualified attorney to determine the best course of action for your individual situation. Keep in mind that bankruptcy should be considered a last resort, and it’s crucial to carefully weigh the potential benefits and drawbacks before making a decision.<\/p>\n","protected":false},"excerpt":{"rendered":" Introduction to Student Loan Bankruptcy A new study has found that the success rate for student loan borrowers who attempt to discharge their debt in bankruptcy has increased significantly in recent years. The study, published in The American Bankruptcy Law Journal, analyzed 652 bankruptcy discharge cases from October 2022 to November 2023 and found that […]<\/p>\n","protected":false},"author":1,"featured_media":981,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"https:\/\/image.cnbcfm.com\/api\/v1\/image\/108246182-1767013945833-gettyimages-2193765203-office_dec_2024_07915.jpeg?v=1767013988&w=1920&h=1080","fifu_image_alt":"","footnotes":""},"categories":[21],"tags":[],"class_list":{"0":"post-980","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-personal-finance"},"_links":{"self":[{"href":"https:\/\/sosahustle.com\/blog\/wp-json\/wp\/v2\/posts\/980","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/sosahustle.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/sosahustle.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/sosahustle.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/sosahustle.com\/blog\/wp-json\/wp\/v2\/comments?post=980"}],"version-history":[{"count":1,"href":"https:\/\/sosahustle.com\/blog\/wp-json\/wp\/v2\/posts\/980\/revisions"}],"predecessor-version":[{"id":982,"href":"https:\/\/sosahustle.com\/blog\/wp-json\/wp\/v2\/posts\/980\/revisions\/982"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/sosahustle.com\/blog\/wp-json\/wp\/v2\/media\/981"}],"wp:attachment":[{"href":"https:\/\/sosahustle.com\/blog\/wp-json\/wp\/v2\/media?parent=980"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/sosahustle.com\/blog\/wp-json\/wp\/v2\/categories?post=980"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/sosahustle.com\/blog\/wp-json\/wp\/v2\/tags?post=980"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}Smart Tip for Readers<\/h2>\n