Gingold Speaks Out on Student Loan Debt and Social Security

Student loan debt is rising. With the rising cost of education, more and more Americans owe money on their student loans. Currently there is approximately $1 trillion in outstanding student loan debt. With the floundering economy, many have found themselves struggling to pay back that debt. An increasing number of Americans are looking to bankruptcy for relief.

Unfortunately, student loan debt cannot be wiped out in bankruptcy unless payment would be an undue hardship to the borrower. More traditional forms of debt such as medical bills, credit card debt and unsecured loans, can be wiped out or discharged in bankruptcy. Many frustrated borrowers throw up their hands after a while and simply stop making payments. Reducing student loan payments is an important advantage in filing bankruptcy.

Social Security and Federal Student Loan Debt

While people may be able to duck student loan debt for a while, eventually it will catch up to them, usually when they can least afford it: when they need to collect Social Security for retirement. Individuals with unpaid federal student loan debt may not realize it now, but the federal government can withhold a portion of their Social Security money to recover the money that is owed. In 1996, Congress passed a law that authorized the U.S. Department of the Treasury to deduct a portion of an individual’s Social Security money to pay back certain government debts.

Currently the number of Georgians affected by this is relatively small. Only 3,500 people in the state are having some of their Social Security withheld by the Treasury, but that number is only expected to grow. Many seniors are still carrying loans of their own while others owe money for the ParentPlus loans they took out on behalf of their children.

Ira Gingold, an Atlanta bankruptcy lawyer and Court-appointed Bankruptcy Trustee, sees the student loan bubble as a rising problem that is likely to affect the growing number of people approaching retirement age.

Gingold agrees that people owe their student loans because of federal law. “If someone got the benefit of going to college and they were given the student loans, they owe the money,” he told the Atlanta Journal and Constitution, “But the flip side to that coin is that to take someone’s Social Security is about the most awful way to collect a student loan that I know of.”

Solutions for Student Loan Problems

Federal and state governments have not yet found any great solutions that will help the growing number of Americans being swallowed by student loan debt. Short of reducing the cost of education and placing caps on the interest rates that private lenders may charge, experts outside of bankruptcy have not found any simple answers to the student loan problem. Economic analyst Rohit Chopra told Bloomberg that student loan debt is increasingly becoming a factor in delaying an economic recovery.

While experts debate the best solutions to the mounting student loan problem, individuals currently swallowed by their debt are wondering what options are available to them. Gingold has solutions for individuals and families slipping into debt.

Bankruptcy can help. By eliminating unsecured debts in either Chapter 7 or Chapter 13 bankruptcy, individuals can free up cash to meet their student loan obligations. With more money available, student loans can be paid off more quickly getting people to financial freedom that much faster.

Some individuals having multiple payments to different lenders may be able to consolidate those payments in a Chapter 13 bankruptcy. By consolidating these payments, individuals may be able to lower their monthly payments.

For many, getting on top of student loan debt requires creativity. Speaking with an experienced bankruptcy attorney may be able to help.