For a lot of people in Maryland, finding a secure, stable job usually means getting a college degree first. Attending college is not cheap, though, and student loan repayments often outpace people’s initial earnings. This often results in stressful financial situations. For some people, bankruptcy could be the solution.
Bankruptcy and student loans
A common myth surrounding bankruptcy is that it is impossible to discharge student loans. While it might be a challenge, many people have successfully had their student loans discharged. According to one researcher, student loan discharge might even be more common than in the past. In 2007, 40% of people who tried to get their student loans discharged during bankruptcy were able to do so, compared with 60% in 2020.
Despite the increasing success rate, some student loan borrowers still hesitate to move forward with this decision. Some may feel worried about going through the process only to be told “no,” while others might still be convinced that getting rid of their student loans is simply impossible. Those who want to improve their chances of discharging these loans can take a proactive stance, which includes:
- Deciding on Chapter 7 or Chapter 13 bankruptcy
- Figuring out whether student loans are federal or private
- Researching income-based repayment plans
Student loan borrowers owe a collective $1.5 trillion — more than what all Americans owe on auto loans and credit cards combined. Paying back significant amounts of debt is just not realistic for some people in Maryland, especially those who might be experiencing financial stress in other areas of their lives. For these individuals, bankruptcy can often provide a clear path forward.