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White house weighing changes to student loan bankruptcy law Atlanta, GA

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White house weighing changes to student loan bankruptcy law

Educational debt has reached crisis levels in the United States, with the nation’s total student loan balance now more than double what it was in 2007. According to data from the U.S. Department of Education, the average student borrower in Georgia owes more than $30,000 in educational loans, and many borrowers – particularly those who have pursued advanced degrees – owe far more. In response to this growing crisis, the White House is considering some big changes that could create new options for people who cannot afford their student loan payments.

Revisiting student debt discharge options

Unlike many other sources of major debt in the United States, such as medical bills and credit card debt, student loans typically cannot be discharged through the Chapter 7 bankruptcy process. This is because relatively recent changes to the federal bankruptcy code prevent educational loans from being eliminated except in rare cases of extreme economic hardship.

In response to the growing student debt problem, however, the White House recently announced its plans to revisit the question of whether student borrowers should be permitted to make a fresh start through bankruptcy. Under current laws, a 2012 survey of bankruptcy lawyers by the National Association of Consumer Bankruptcy Attorneys showed that 82 percent said the inability to eliminate educational loans through bankruptcy was “a big problem” preventing their clients from obtaining debt relief.

President Obama has directed the administration to investigate whether bankruptcy options should be expanded for “all student loan borrowers” – both public and private. About 90 percent of student loans in the U.S. are backed by the federal government, while the remaining 10 percent are backed by private companies such as Sallie Mae, Wells Fargo and U.S. Bank. In the past, most discussions about reevaluating the student loan discharge rules have centered only on private loans.

Other student loan bankruptcy issues

The question of whether to allow educational loans to be discharged in bankruptcy is not the only issue being addressed in the Obama administration’s recent focus on student debt. The initiative also includes measures that will provide for stricter oversight of student loan collection companies and create a system for borrowers to register complaints about those companies. The President has also called for clarification of the rights of student loan borrowers in other areas of bankruptcy law.

One way that such clarification could be particularly beneficial for people with educational debts is through the potential expansion of student loan repayment options for borrowers who pursue another type of bankruptcy known as Chapter 13. Unlike Chapter 7, which involves the elimination of debts through discharge, Chapter 13 involves reorganizing and repaying certain debts according to a court-approved payment plan.

According to a recent email from Edward Boltz, President of the National Association of Consumer Bankruptcy Attorneys, Chapter 13 debtors with government-backed student loans may soon be eligible to enroll in income-based repayment (IBR) programs. These flexible repayment plans allow borrowers to make reduced monthly payments based on their income levels. Borrowers who keep up with their payments for a certain number of years can have their remaining balances cancelled. In the past, student borrowers have been unable to enroll in IBR plans during Chapter 13 bankruptcy, thus limiting their ability to obtain maximum debt relief.

Get legal help for your debt problems

If you are struggling with unmanageable debts and would like to learn more about your options for easing those debts through the bankruptcy process, contact the knowledgeable bankruptcy attorneys at Gingold & Gingold LLC to discuss the specifics of your situation.

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Jack L.

They did an excellent job with my case. Jamie took the time to really listen and understand things. She delved into the details and was extremely knowledgeable and non judgmental. Very professional and they know what they are doing. Would definitely recommend!

All C.

Mr. Gingold was recommended by an attorney I had worked with previously. I met with Ira Gingold to discuss credit issues. He went over each specific issue thoroughly. He advised me of the potential outcomes. He did all this in one meeting for a very reasonable price. When we finished I was confident in moving forward with a resolution. He definitely wants to help people take the appropriate course of action for their circumstance.

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Dear Mr Gingold, There are so many reasons to be thankful for all you have done and will do. Anyone who has ever had unfavorable experiences with an attorney or the legal system will feel the trepidation that I experienced once I realized that my situation seemed hopeless. It was by chance and happily good luck that I decided to put my future and sanity into your hands. I was mortified at having to deal with my debts by claiming bankruptcy. I remember in our first meeting how you assured me that I was not alone and should not feel ashamed. And, anyone in this position obviously does not have money to spare and you were clear about all the costs and allowing me to pay according to my own ability to do so. You advised me in all aspects of the law, but also, you were at each meeting incredibly supportive and complementary of my personal and professional plans. Anyone else in this situation should feel blessed to have access to your expertise and support.

Lyla B.

I thought the process of filing bankruptcy was going to be a difficult one. However, Gingold & Gingold treated me with respect and dignity from the moment I walked through their door. I had the pleasure of working with Jamie. She is very responsive, professional, and knowledgeable. She took the time and listened to my every concern and handled each and every one of them to my satisfaction. My experience with filing bankruptcy under Gingold & Gingold's representation exceeded my expectations in a major way. They gave me such a peace of mind. I am very pleased with my decision of going with Gingold & Gingold to represent me when I filed Chapter 13 bankruptcy.

Julie T.

Wow! I am finally out of debt and can say that I am debt free after completing my chapter 7 bankruptcy case with Gingold and Gingold. Mr dangled was very knowledgeable and direct with regard to my debt situation. there were no surprises and the case went as I was advised. The staff was also very helpful whenever I had a question. I will definitely recommend them in the future to my friends.

Sherard W.

I cannot say enough about this law firm. From the initial consultation to our discharge, the entire office kept me updated with every step of the entire process. I came to the Gingold after a bad experience with another law firm. Ira and Jamie immediately began treating me like family through this experience. In the end, they assisted with eliminating many debts including my 2nd mortgage. I cannot say enough about the experience and knowledge that Ira brought to the table from the office visits to the court time. Thank you very much for helping me through this tough time. Thank you.

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