Future.

For many people in Mississippi, student loans have offered a pathway to future career success. Excessive student loan debts, however, have proven burdensome for many people in recent years. Nationwide, outstanding student loan balances will likely hit $2 trillion by 2020. Delinquency or outright default afflicts over one-quarter of student loan borrowers today. Due to the inescapability of these debts, a group of lawmakers has proposed the Student Borrower Bankruptcy Relief Act of 2019.

If passed, the law would clarify the conditions that qualify a borrower for bankruptcy discharge of student loans. A previous reform to federal bankruptcy law installed a vague standard known as undue hardship that could allow someone to gain relief from student loan debt through bankruptcy. The law failed to create a clear definition of undue hardship, which has been left to the whims of judges. Without a clear definition, judges have made inconsistent decisions. In this unpredictable environment, debtors have few options for dealing with student loans that they cannot repay.

The Federal Reserve System chairman has acknowledged that the growing debts among so many people could hobble economic growth. The chairman said they could think of no reason why bankruptcy law should view student loans differently than other consumer debts. Critics of the proposed reform worry that it would make lenders raise interest rates on student loans. Advocates for debtors have countered that a viable bankruptcy option could make lenders more willing to work with debtors trying to catch up their payments.

When debts overwhelm a person, it starts a downward cycle that could result in wage garnishment, repossession and foreclosure. A person confronted by excessive debts may want to ask an attorney for advice. An attorney may help manage a bankruptcy filing for a qualifying debtor and take action to stop harassment by creditors.