America’s student loan debt crisis is taking its toll on consumers in Tennessee and across the United States. A new study by LendEDU finds that 32% of individuals filing for Chapter 7 bankruptcy have student loan debt. Of those individuals, student loans account for almost 50% of their average total obligations.
Statistics show that Americans are drowning under a total of $1.5 trillion in student loan debt, which is an all-time high. In 2018, the average student graduated owing $29,800 in loans, according to Student Loan Hero. In addition, Business Insider has reported that millennials have 300% more student loan debt than their parents did. To discover the impact this debt is having on borrowers, LendEDU researchers analyzed 1,083 individual bankruptcy filings handled by non-profit group Upsolve, which provides Chapter 7 bankruptcy services to consumers with low incomes. Information from those who file for Chapter 13 bankruptcy was not included in the study.
Current law prevents student loan debts from being discharged as part of a bankruptcy filing in most cases. That means that borrowers included in the LendEDU study still had to pay back their student loans, which accounted for nearly 50% of their debt, after emerging from bankruptcy. However, discharging credit card balances, auto loans and other types of unsecured debts would have relieved some of the financial strain, freeing up more income for borrowers to pay down their student loans.
Tennessee residents having difficulty paying off their debts might wish to consider filing for Chapter 7 bankruptcy. By taking this action, it may be possible to stop creditor harassment, end wage garnishment and get a fresh financial start. Borrowers facing financial challenges could have their situation evaluated and learn more about their legal options by contacting a bankruptcy attorney for assistance.