Many recent college graduates in Arkansas, like those in the rest of the country, have had challenges finding employment in their field of study. These individuals are forced to become less selective in their searches, taking whatever positions that they can find. Often, these jobs are low-paying, and cause significant financial hardship for those who have student-loan debt to repay.
Recently, there has been an increase in the number of debt-relief organizations committing to helping individuals who are struggling because of these obligations. They charge the graduates extensive sums of money upfront, as well as a monthly fee, to help them try to discharge their debt. What many individuals fail to realize is that they may be doing themselves more harm than good.
These companies are actually charging students for free government programs. Some even require the borrower to give the companies power of attorney to handle debt concerns. Often, the individuals that hire these organizations are unaware of the fees being charged each month, because the companies do not disclose this information upfront. The borrowers are then incurring continuing debt, making it more difficult for them to make ends meet.
Some of the debt-relief agencies have even told students that they would be able to file for bankruptcy to eliminate their student loans. Unfortunately, for many individuals, this is not accurate. Student loans can only be discharged in bankruptcy in cases of undue hardship, which is an extremely tough standard to meet.
However, bankruptcy may help individuals with other debts that they may have, including credit cards or medical expenses. Recent graduates may have fallen behind on other bills, and bankruptcy will allow them to reorganize their finances to help them meet their student loan obligations.
Debtors with questions about the process may wish to speak to an experienced bankruptcy attorney about the options that may be available. An attorney can help these individuals create a plan that will work best for their specific financial situation.
Source: CBS News, "Beware the student-debt-relief industry," Lynn O'Shaughnessy, June 20, 2013.