Student Debt Cancellation and Bankruptcy: What To Consider
If you are struggling with student loan debt, you are probably reading news about a couple of key things: the possibility of student loan debt cancellation, and new guidance concerning the discharge of student loans in bankruptcy. As you likely know, the U.S. Supreme Court recently heard the case concerning student loan debt cancellation and whether the Biden administration is permitted to implement its student loan debt cancellation plan. Depending upon the amount of money you owe, and the amount of cancellation you would be eligible to receive, you might also be thinking about filing for bankruptcy in order to have your student loan debt discharged. Our West Palm Beach bankruptcy lawyers are here to discuss the issue of student loan debt cancellation and turning to bankruptcy as a way to have student loans discharged.
Will Student Loan Debt Be Canceled?
Will student loan debt be canceled? According to a report from CNBC, the U.S. Supreme Court just heard arguments to “determine if borrowers get the up to $20,000 in debt cancellation President Joe Biden had promised before conservative groups and Republican-led states brought a flurry of lawsuits against the plan.”
If the Court decides to allow the debt cancellation to occur, CNBC reports that “some 20 million people would have their debt entirely cleared by the policy.” The timeline for the Court’s decision is not set, but it is possible that the decision will come down in June when the Court releases other decisions from its recent slate of arguments.
Bankruptcy As an Option or an Alternative
For many people considering bankruptcy in order to have student loan debt discharged, they owe more than what would be canceled anyhow. In other words, since the Biden administration’s plan would allow for the cancellation of either $10,000 or $20,000, depending upon whether the borrower had a Pell Grant, many debtors owe more than those amounts and would want to consider bankruptcy regardless of whether cancellation moves forward. At the same time, there are some debtors whose student loan debts would be wiped out entirely if cancellation moves forward, so they will need to consider alternatives if cancellation does not occur.
Here is where bankruptcy may be beneficial for many debtors. While student loan debt has traditionally been difficult to discharge in bankruptcy, new guidance has resulted in a change to the process. While the underlying requirements for a discharge have not changed, the process has become significantly easier for debtors to prove that they meet the requirements for discharging student loan debt in bankruptcy. As such, whether or not student loan debt cancellation occurs, bankruptcy may be either an option or an alternative for debtors, depending upon their circumstances.
Contact Our Bankruptcy Attorneys in West Palm Beach
Many Florida residents are waiting anxiously to learn more about what will happen with student debt cancellation. For anyone who has more student loan debt than the amount that could be eligible for cancellation, or for anyone who ultimately learns that their debt will not be canceled, it is essential to remember that it may be significantly easier than it used to be to have your student loan debt discharged in bankruptcy. One of the experienced West Palm Beach bankruptcy lawyers at Kelley Kaplan & Eller can assess your circumstances for you today and provide you with additional information.