Student loan debt burdens many people in Tennessee and across the United States. This debt often makes it difficult for people to gain a solid financial footing as much of their income is used to repay student loans. Many people struggling with student loan debt may want to turn to bankruptcy to get a fresh financial start. While changes have been proposed to the current bankruptcy code, as was explained in a recent article on this blog, the current law makes discharging student loans in bankruptcy difficult.
Since the start of the Great Recession in 2008, many Tennessee families have struggled to make ends meet. Now, while the economy has started to bounce back, many people still suffer the effects of the recession and the crippling economic damage it created. Many people live with constant creditor harassment. People may be afraid to answer the phone or open their mail, for fear of credit card balances, threatening tones or legal action. In some cases, people may be afraid of losing their car, their home or other personal possession.
Those Tennesseans who are struggling with overwhelming debt are not alone. In fact, a recent study conducted by the Urban Institute and Encore Capital found that more than one-third, 35 percent, of Americans who have credit files have debt that has been turned over to collection agencies. That's 77 million individuals. The study assessed non-mortgage debts like medical expenses and credit card bills that were so overdue that the account was handed over to collections. The median amount in collections is more than $1,300, a significant amount. Of course, many face much higher debt amounts that can leave them financially debilitated.
Many Tennesseans try to handle their debt responsibly. They attempt to make payments on time, pay debt off in a timely fashion, and communicate with their creditors when necessary. However, life is always unexpected, and sometimes unexpected events throw a wrench in our financial planning. An unexpected illness, job loss, or wage cut can all leave an individual facing tough financial challenges. However, there are other debts that may be thrust upon an individual in surprising fashion, leaving him or her desperate for help.
As college tuition and the cost of living continue to rise, more and more Americans are finding themselves with overwhelming student loan debt. With high interest rates, these debts can quickly spiral out of control and leave a borrower stressing over whether or not he or she will even ever be able to afford to pay it off. When such personal debt creates extreme financial challenges, these individuals may find themselves asking if they can discharge their student loans through bankruptcy.
In today's struggling economy it is not uncommon for an individual to be struggling with personal debt. In fact, one out of every seven individuals is currently being pursued by a debt collector. Medical debt, credit card debt, mortgage debt, and student loan debt can all mount, and before one knows it he or she is overdue on debt and is being harassed by creditors. In some instances, overwhelming debt can even lead to wage garnishment. However, certain protections are in place to protect consumers from debt collectors, and Tennessee residents should take note.