Changes in Bankruptcy Law For pupil Loans

Student Loans And Bankruptcy New Law - Changes in Bankruptcy Law For pupil Loans

The course of the Us government is so tailored that student loans for schooling are undoubtedly available. The supervene is that liberal loan schemes are on the anvil and loans for higher studies are open for all.

Student Loans And Bankruptcy New Law

However during the seventies a distinct phenomenon had taken place. Students then in large numbers took schooling loans and accordingly obtained their degrees. But on completion of their courses, before they had got a job the students would file for bankruptcy. The purpose was to get out of the liability to pay back the loan.

They could thus report to the courts that they had no wage in their plea of bankruptcy as they were unemployed. Any way to obviate this lacuna and also due to intense pressure the government changed the law and the requirements in 1998. There were additional changes in 2005 and hidden loans were also brought within the legal net.

The changes have effectively made it difficult to discharge student loans with a simple plea of bankruptcy. The only health that can lead to a discharge of a student loan now is,if the student can prove that repaying the loan would create an undue hardship on him and his family. Proving this is the accountability of the student himself. Prior to this student loans could be discharged in case they were paid for 7 years but this has also changed since 1998.

Student loans are contracts like any other loan and are branch to laws governing contracts.Thus fraud, misrepresentation etc are open to challenge in a court of law. Other point in students favor is that the students' loans are not enforceable when the school has terminated prior to the student completing his education. These challenges could be raised in a episode 13 proceeding and decided by a bankruptcy judge.

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