Student loan debt is at a record $1.35 trillion, and the situation may pose ominous threats to domestic economic stability. It is therefore puzzling to some why the United States Congress went to such lengths in 2005 to make it so much harder for consumers to discharge that category of debt in a bankruptcy proceeding. Nonetheless, the current status of student loan debt regarding bankruptcy in Pennsylvania and nationwide remains uncertain and difficult, but with indications of more flexibility ahead.
For consumer borrowers in Pennsylvania, a calculation called the debt-to-income ratio is sometimes helpful in determining whether the consumer can pull out of the debt situation without filing bankruptcy. A debt-to-income ratio of 20 percent is considered low by the government and, as such, would be ideal for government lending. Any percentage over 40 percent is considered financially stressful and could lead to a recommendation of filing bankruptcy.
Consumers in Pennsylvania who are so overwhelmed with unsecured debt that it would take many years to pay their way out of it may be concerned about how to resolve the issue. When an individual or married couple cannot pay a reasonable amount each month toward their accumulated unsecured debt balances, while simultaneously affording to have appropriate shelter, food and necessities, the situation may have reached critical mass. It may be time to have an evaluation with a consumer debt counselor, and in many cases, with an experienced consumer bankruptcy attorney.
During a typical consultation with a consumer bankruptcy attorney, one central question is often whether the individual or married couple really need to file a bankruptcy or whether there is an easier, less consequential, remedy available. The answer will often be the same whether the clients reside in Pennsylvania or another state. The bottom line issue in deciding whether a bankruptcy is the best remedy under the circumstances is to determine whether the amount of debt far exceeds the ability to realistically ever pay it off.
Some Pennsylvania residents might find themselves in need of seeking effective solutions for significant financial problems. Many fail to consider bankruptcy as a potentially viable option. Whether one's financial strain is personal or related to business, issues surrounding a dire need for immediate debt relief can cause stress and anxiety to those involved. Legal assistance is available that can help alleviate some of that stress and point you in the right direction for resolving your financial struggles.
Both in Pennsylvania and throughout the country, people who have been through a bankruptcy are becoming more accepted in public service professions, such as serving in a legislative body or otherwise holding public office. Some of them even champion fiscally conservative platforms. Increasingly, they are freely sharing their struggle and bankruptcy filing as being a valuable learning experience.
A major dilemma faces the government and the banking industry with respect to the $1.2 trillion in student loan debt that has riddled the country in the past several years. President Obama proposed that bankruptcy be brought back to allow for student debt forgiveness, presumably within a Chapter 7 framework. Such a change would be wonderful news to Pennsylvania citizens buried in debt and to those in other states. However, what will be the impact on the student loan industry, and how will such loans be originated going forward, are among the perplexing questions that are being raised?
Although bankruptcy is authorized by federal law, certain myths associated with this legal remedy continue to persist. The myths serve to perpetuate a negative stigma about bankruptcy in Pennsylvania and throughout the country; however, they are not based in reality. Unfortunately, the stigma will remain until consumers are better informed about the powerful features of bankruptcy that allow them to obtain fresh starts in their economic lives.
Every once in a while, the filing of a Chapter 7 bankruptcy in Pennsylvania or another state marks the end of life for a cherished local tradition. It may be an ancient landmark connoting a significant historical event. It could be an old hotel that catered to the rich and famous, perhaps a favored watering hole and popular night spot, or a restaurant famous to the local people. Although few would like to see it close forever, there are no economic pathways that lead forward, and the announcement is made to close the doors via Chapter 7 bankruptcy.
Most Pennsylvania residents are aware that one of the leading causes of personal bankruptcy is the medical debt that follows a significant illness or injury. However, few understand just how the statistics supporting this claim are gathered. A recent article takes a closer look at how we determine which factors are behind the decision to pursue personal bankruptcy, and the measures in place to ensure that those numbers are accurate.