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Bill would ease tax burden of forgiven student loans Atlanta, GA

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Bill would ease tax burden of forgiven student loans

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Earlier this summer, we wrote about the massive student loan debt many college attendees in Georgia and the rest of the United States are dealing with. In fact, current estimates suggest that roughly 40 million Americans owe about $1.2 trillion for their time in college. On average, college students are graduating with about $30,000 of debt.

We also discussed that while it usually isn’t possible to get student loan debt discharged through bankruptcy (unless severe hardships exist), bankruptcy still might be an effective way for those overburdened by student loan repayments to get rid of other unsecured debt or consolidate their payments.

There are other forms of help available to those struggling with student loan debt as well. The federal “Pay as You Earn Program” was extended to about 5 million additional borrowers earlier this year, which forgives remaining student loan balances after 20 years or more of consistent payments.

But the program comes with a catch: The forgiven debt is treated as taxable income by the IRS so borrowers are then hit with a tax bill that could easily be in the thousands; thereby trading in one form of debt for another.

However, lawmakers from Florida and Wisconsin have introduced a bill in Congress that would exempt borrowers from being taxed on the student loan balances that are forgiven. The theory behind the bill is that if borrowers cannot afford to repay the remaining balance on their student loans, they likely also can’t afford to pay a huge tax burden.

The Relief for Underwater Student Borrowers Act is in its infancy and still has a long way to go before becoming law, but it would be crucial for borrowers who take part in the Pay as You Earn Program. We will keep an eye on the bill’s progress throughout the remainder of the legislative session and report any developments.

Source: Fox Business, “Tax Implications of Student Loan Forgiveness,” Bonnie Lee, Aug. 21, 2014

Posted on behalf of Gingold & Gingold

1718 Peachtree St NW, #385
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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!

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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.

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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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