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Escaping student loans through bankruptcy: Fact or fiction?

Year after year, school gets more expensive for individuals in Tennessee attending college and grad schools. Those spiraling costs have had an unsurprising effect -- bigger student loans. Long gone are the days when a student could pay off all of their school costs just by working while they went to school.

Unfortunately, ballooning tuition charges have not been met by skyrocketing entry-level salaries. To the contrary, graduates of recent years have endured tough job prospects and stagnant wages.

These twin hardships, rising costs and slim employment opportunities, have left many graduates buried under a mountain of student loan debt. That mountain would not be so worrisome except for an important fact: student debt is nearly impossible to discharge through Chapter 7 or Chapter 13 bankruptcy.

To discharge student loans via bankruptcy, a person must show that paying their student loans imposes a severe hardship on them. That should be easy, right? Wrong. In practice, courts have interpreted this standard in such a way that almost no one can make the necessary showing.

Those unintimidated by the long odds can expect the bankruptcy court to examine a variety of factors. These include the person's age, income, expenses, health condition and how long their income problems will likely continue.

Because bankruptcy is an unlikely route for extinguishing student loans, individuals in Tennessee are often best off scouring their other repayment options. Many favorable routes exist from loan cancellation to forbearance and deferment. These alternatives may provide enough breathing space for a person to climb out from underneath the avalanche of student loan debt crushing down on them.

Source: FindLaw, "Your Options When You Can't Repay Student Loans," Accessed May 30, 2016

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Mark T. Young & Associates
2895 Northpoint Blvd.
Hixson, TN 37343

Toll Free: 888-376-0282
Phone: 423-933-1606
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