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Credit card debt signals possible consumer crisis ahead

Numerous young adults in Tennessee and around the country are deep in debt. Some experts predict that many of these young people are not expected to pay off the huge tabs that they are creating. Part of the problem may be that many of those who are burdened with overwhelming credit card debt are also facing or will face hefty student loan debt. Despite the fact that student loans are usually not dischargeable in bankruptcy, many people cannot even consider paying student loan debt when they are burdened with overwhelming unsecured debt.

In a Chapter 7 bankruptcy, an individual or married couple can erase all credit card and medical debt permanently, without making debt management payments. Even if one comes out of a bankruptcy with his or her student loan still due, the relief may be well worth it. There may be no other rational way to encounter and deal with the student loan debt.

Issues like that are open to discussion with a consumer bankruptcy attorney. Such consultations are often offered free to the consumer who needs information and a financial evaluation. The consumer and the attorney can determine whether the elimination of the credit card and other unsecured debt, such as medical bills, will be worth it, considering the existence of student loan obligations.

In limited instances, some borrowers may even learn that there is a possibility of discharging part or all of their student loan debt along with their credit card debt. The law does not absolutely prohibit the discharge of student loans in bankruptcy, but it does demand a heightened degree of scrutiny and proof of severe and lasting hardship by the borrower. When young people have to save also for the college expenses of their own children, making hard choices sometimes becomes necessary. These choices can best be evaluated in Tennessee and in other states by taking advantage of a consultation with an experienced consumer bankruptcy attorney.

Source: nerdwallet.com, "Sitting Down With Professor Thorne", Dec. 28, 2017

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