Illinois Legislature passes student loan resolution

Illinois Legislature passes student loan resolution

One of the financial problems faced by young people today is
student loan debt. Many find that this is unavoidable, as a person
often needs to go to college to get a higher paying job in today’s
world. However, upon graduation, there are no jobs available, due
to the slowly recovering economy.

Recently, the
student loan debt
crisis has been a recurring topic in the
media, for good reason. Outstanding student loans in the United
States have increased to over $1 trillion—more than what Americans
owe on their credit cards and car loans combined. In Illinois, the
problem has gotten so bad that the legislature recently passed
House Resolution 620. Under this resolution, the legislature
formally asked Congress to amend the bankruptcy rules to make it
easier to forgive student loans in bankruptcy.

Bankruptcy and student loan debt

Currently, student loan debt cannot be discharged in bankruptcy
in most cases. However, contrary to popular belief, this was not
always the case. Student loans were completely dischargeable in
bankruptcy, until the mid-1970s. Since that time, Congress has
periodically enacted legislation that has restricted the discharge
of student loans. Eventually, in 1998, Congress made federal
student loans nondischargeable.

Under the law as it currently stands, private student loans
remain dischargeable, but only in very exceptional cases. The law
requires those seeking a discharge to prove that repaying the loans
would constitute an undue hardship. Although there are differences
in interpretation of the law, most courts require borrowers to

  • That he or she has tried to repay the loan in good faith;
  • That due to the outstanding debt, it would be impossible to
    maintain a minimum standard of living; and
  • That this financial situation is likely to persist unabated for
    the loan’s repayment period.

Although most borrowers can prove the first two elements, most
fail at the last element, as it is difficult to prove that the
borrower would likely never find a job or other source of income
that would eventually allow the loan to be repaid. As a result, the
discharge of private student loans is largely reserved for those
with serious injures that render them unable to work.

Consult an attorney

If you are struggling to pay your student loans, it may seem
that bankruptcy would not be able to help, but this is generally
not the case. Bankruptcy can help by relieving you of your
obligation to pay many other types of debt such as
credit cards
or medical bills. Once relieved of your other
debt, you can devote more of your resources to repaying your
student loans.

In addition to bankruptcy, there are several other ways to
manage student loans. An experienced bankruptcy attorney can inform
you of your options and recommend one that would best address your
unique situation.

Illinois Legislature passes student loan resolution