Discharging student debt through bankruptcy may be on the horizon

Discharging student debt through bankruptcy may be on the horizon

On Behalf of | Sep 15, 2021 | bankruptcy |

The state of Illinois has at least two leaders prepared to advocate on behalf of those overwhelmed by student loan debt. The Illinois attorney general, Kwame Raoul, and Senator, Dick Durbin, are fighting to provide bankruptcy relief for those who cannot pay off their student loans.

Although this is not necessarily breaking news, the efforts of these state leaders (and other national leaders) have made headlines more than ever in recent weeks. Could this mean that student loan bankruptcy reform is on the horizon? Only time will tell at this point.

Durbin introduced a new bill

Sen. Durbin is a well-known advocate for student loan bankruptcy reform. He recently introduced the “Fresh Start Through Bankruptcy Act of 2021.” If passed, the bill would provide student debtors with a chance to take control over their debt when they have no way to repay student loans. Under the Act, federal student loans become eligible for bankruptcy discharge 10 years after the first payment is due.

What does the attorney general say?

As a part of his efforts to usher in student loan bankruptcy reform, our attorney general had the following to say.

  • Some for-profit schools filed bankruptcies in the past, and students could not receive money owed to them.
  • Students should enjoy the same right that schools have to pursue bankruptcy relief.
  • Many student borrowers face the prospect of trying to pay off their loans for their entire lives.
  • Bankruptcy reform addressing student loans would allow borrowers to improve their lives (buy homes, have children, etc.) significantly.

Unfortunately, not everyone can wait for the passing of a bill to find financial relief. Although it might not be possible to discharge your student loan debt, filing for bankruptcy can still help you overcome many of your financial obstacles.