Can Bankruptcy Wipe Out Student Loans After All? NPR says so!
By Stephen Behrends, Jan 25 2020 10:39PM
See the NPR article at:
Unfortunately, this isn’t as good as NPR makes it sounds. There are statistics that show that over 99% of the people with student loans who file bankruptcy don’t even try to get them discharged, but of those who do, about 40% are successful. Therefore, NPR concludes that 40% of the 99% that don’t try would also be successful if they just tried!
But it's likely that the 99% who don’t try have lawyers who advised them against trying because there wasn’t a good argument under existing law to have their student loans discharged. So really, only 40% of those debtors whose lawyers DID think it was worth trying were successful. That isn’t the good news that NPR says that it is. The truth is that IT IS very hard to discharge student loans. It requires a disability that prevents you from supporting yourself and/or your dependents and a situation that is unlikely to change.
But the other part of the article, about how some bankruptcy lawyers and judges are coming up with other ways to help with large student loan debt, is good news. There is a trend towards partial discharges if there was a reasonable effort to repay a substantial amount combined with an inability to completely repay. Usually after completion of a Chapter 13 in a case involving an income driven repayment plan and a large amount of student loans, some borrowers been given a partial discharge of the amount that probably wouldn’t be repaid during the rest of the IDR plan.
The bottom line is that it is very difficult to do and NPR isn’t helping by suggesting that it actually is easy if you just try.