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Student loan debt can lead some to file for Chapter 7 bankruptcy

Many American families still consider a college education to be an essential component to becoming an adult. In fact, some students are willing to go into serious debt to achieve a college degree, and believe that they will have improved job prospects once they have that piece of paper in their hands. In reality, however, the job market is not always as lucrative as many believe, and quite a few college graduates in Arkansas and elsewhere are faced with unmanageable debt. While bankruptcy can offer relief, many people try many other debt relief options before turning to Chapter 7 bankruptcy.

Some graduates are fortunate enough to find a position with a company that will help repay their student loans. An example is found in the consulting firm PwC, which will pay $100 per month toward student loan debt for a period of six years. Other companies take a different approach, offering employees a lump sum loan payment once the worker has completed a predetermined amount of time on the job.

It is estimated that only 3 percent of companies offer any form of student debt assistance. For those who are not so lucky, it can be difficult to meet one's monthly loan obligations. Many students rely heavily on credit cards to cover a portion of their expenses during college and have those bills to pay in addition to student loans. The end result can be a situation where there is insufficient income to cover both cost of living expenses and debt service.

For those in Arkansas who are facing this scenario, it is important to understand how Chapter 7 bankruptcy can help. While bankruptcy will not typically lead to the elimination of student loan debt under current laws, it can be effective at eliminating other types of consumer debt. That can leave an individual with far more financial breathing room as he or she pays down student loans and works to prosper in a new career.   

Source: detroitnews.com, "College debt relief could be next big workplace perk", Jackie Crosby, Jan. 31, 2016

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