When a Tennessee consumer is overwhelmed by his or her financial responsibilities, it can lead to unpleasant consequences, such as wage garnishment and other debt collection efforts. Credit card debt and medical bills can lead to an unmanageable debt burden, as can student loan debt. Many people seek debt relief through Chapter 7 bankruptcy, but one type of debt not dischargeable through this process is student loan debt.
Many people emerge from college or graduate school with a lot of student loan debt. They have the intention of making payments over several years to pay off the balance, but many find that circumstances beyond their control prevent them from doing that. Despite the widespread problem of this type of debt, federal bankruptcy laws prevent people from getting rid of these balances when they file for bankruptcy.
Thankfully, this may change in the near future. A newly proposed law could remove the part of bankruptcy laws that prevents certain types of student loans from being discharged during the bankruptcy process. Statistics indicate that approximately 32% of bankruptcy filings are by people who are also carrying student loan debt. Of this percentage, this type of debt makes up about half of their total debt burden.
Tennessee consumers drowning in debt may find that Chapter 7 bankruptcy gives them a way out of their financial situation. Unless the law changes, this process cannot help with student loans, but it can still help a person attain a better financial future. Discharging certain types of unsecured debt can free up financial resources by which a person can deal with his or her student loan balances.