student loans

Bankruptcy Expert Claims It May Be Your Only Option if Biden’s $20K Student Loan Forgiveness Plan Fails
Shutterstock / Shutterstock

Shutterstock / Shutterstock

President Joe Biden’s plan to forgive up to $20,000 in federal student loan debt per borrower could soon reach endgame if the U.S. Supreme Court rules against the plan this month, as many predict. If the plan is struck down, at least one legal expert says bankruptcy might be the only option for many borrowers.

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The reason is simple: Many borrowers won’t have enough funds when federal student loan payments resume sometime this summer following a pause of more than three years.

About 20% of student loan borrowers have already defaulted on a loan, according to Jonathan Petts, CEO of Upsolve, a non-profit organization that helps individuals file bankruptcy without using a private attorney. The total amount already in default is more than $124 billion.

“This demonstrates a clear need for a plan to help borrowers facing challenges with paying off their debts,” Petts told GOBankingRates in an email.

He said the Biden forgiveness plan is “likely to be struck down” by the SCOTUS, which means both loan payments and interest will resume not too long

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June 26, 2023 by ATTORNEY

I have $30K in credit card debt. I earn $70K a year. Should I file for bankruptcy?

STATEN ISLAND, N.Y. — Many people will find themselves in debt at some point in their lives.

And it doesn’t matter whether you lost your job or it’s medical bills that have piled up, when you don’t have the money to pay your debt, collectors will track you down. But when deciding whether to file for bankruptcy, there are a lot of factors to consider.

For this reason, we sought advice from Karra L. Kingston, a bankruptcy lawyer on Staten Island and in New Jersey, who has helped hundreds of people get out of debt.

Question: I have 30K in credit card debt. I earn 70K a year. Should I file for bankruptcy?

Kingston: “Filing for bankruptcy is a difficult decision to make, but it can be the most effective way to take control of your finances and make a fresh start. Bankruptcy laws were established to help people who are struggling with debt to find a way out of their financial difficulties.

When deciding whether to file for bankruptcy, you need to assess your financial situation, including whether you have enough money to repay your debts, and whether your monthly expenses are greater than your income. If you

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May 23, 2023 by ATTORNEY

Biden Administration Makes It Easier To Have Debt Discharged Through Bankruptcy
AL DRAGO / POOL / EPA-EFE

AL DRAGO / POOL / EPA-EFE

While certain student loan borrowers can use the bankruptcy process to have their loans discharged, the process has been very cumbersome — but this might change thanks to new guidelines.

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In January, the Justice Department updated the attestation form that borrowers must complete to seek bankruptcy discharge of their federal student loans, Forbes reported. These changes include “tweaks to the reporting of monthly household income, clarifying instructions regarding when a borrower needs to provide additional information, new questions seeking details on whether a school closure impacted a borrower’s ability to repay their student loans, and more detailed information on a borrower’s student loan repayment, deferment, forbearance, and consolidation history.”

In addition, the updates stated that if the borrower is disabled, the disability does not have to be “permanent,” only “chronic” to potentially be a basis for a bankruptcy discharge.

This comes on the heels of the Department of Justice (DOJ), in conjunction with the Department of Education, issuing new guidance to simplify the process and establish standards for borrowers who seek

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March 23, 2023 by ATTORNEY

Software sales trainer Prehired loses bid to keep bankruptcy in N.Y.

(Reuters) – A New York bankruptcy judge on Tuesday transferred the bankruptcy of Prehired LLC to Delaware, ruling that the software sales training company did not have sufficient business ties to New York to file for bankruptcy in the state.

U.S. Bankruptcy Judge Philip Bentley granted the transfer at the request of Delaware’s attorney general, one of several state AGs investigating Prehired for its attempts to collect on payment agreements that allowed students to defer fees for career training.

Prehired filed for Chapter 11 protection in New York in September, citing students’ failure to pay for sales training and state attorney general investigations into its attempt to collect money from former students. Prehired requires its students to pay $30,000 in $500 monthly installments after they land a job in the field of software sales.

Delaware Deputy Attorney General Katherine Devanney argued that Prehired’s bankruptcy case should be heard in Delaware, where the company is incorporated and where it sued 289 former students who did not make payments after completing Prehired’s training.

Prehired’s attorney Christopher Warren argued that the bankruptcy case should remain in New York because its principal assets are contracts based on New York law. The assets are mostly

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October 30, 2022 by ATTORNEY

It’s a ‘severe problem’ that student-loan borrowers are still facing roadblocks getting rid of their debt through bankruptcy, Elizabeth Warren says
Sen. Elizabeth Warren

Sen. Elizabeth Warren.Tom Williams/CQ-Roll Call, Inc via Getty Images

  • Elizabeth Warren called on the Justice Department to restore bankruptcy protections for student-loan borrowers.

  • Borrowers currently have to prove a difficult standard in court to get rid of their debt.

  • Biden’s administration has promised reform, but the process continues to be slow-moving.

Massachusetts Sen. Elizabeth Warren is renewing the call to restore bankruptcy protections for student-loan borrowers.

Last week, President Joe Biden took a major step in providing relief to millions of borrowers by announcing up to $20,000 in student-loan forgiveness for those making under $125,000 a year. While that relief is expected to wipe out balances for 20 million borrowers, the majority will still have debt balances that some might seek to discharge in court through bankruptcy. But doing so has historically been very difficult, and Warren wants Attorney General Merrick Garland to ensure bankruptcy becomes a viable route to providing relief.

“To support the administration’s efforts to overhaul the student loan system and ensure that bankruptcy relief is a viable option for borrowers in severe financial straits, it is critical that you issue and implement this updated guidance without delay,” Warren wrote in a Thursday letter

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September 12, 2022 by ATTORNEY
October 2023
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