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Chapter 13 bankruptcy can help obtain student loan debt relief

The student loan debt crisis has affected many people in Tennessee and all over the United States. According to reports, the national average outstanding student loan is $30,000. The financial challenges that those debtors face are compounded by a weakened economy, which has stifled the earnings of many people. Those people need to understand that filing for bankruptcy may be the best option for debt relief.

For example, by filing for Chapter 7 bankruptcy and proving that the debtor is enduring hardship, it can result in a hardship discharge. However, according to existing laws, convincing the bankruptcy court about such hardship is often a difficult task. A Chapter 13 filing, on the other hand, can provide the debtor with an opportunity to restructure the debts according to that person's available resources.

If a debtor chooses the Chapter 13 route, it is possible for that debtor to devise a repayment plan that will continue for up to five years. However, it is important for student loan debtors to remember that although they will get some flexibility by filing for Chapter 13 bankruptcy, interest will continue to accrue and the payment, if not planned adequately, may not reduce the outstanding debt by the desired amount.

Chapter 13 bankruptcy is especially valuable for those people who have borrowed from private lenders because, in the case of government loans, there are already a number of restructured plans based on the debtor's ability to repay the debt. Moreover, by filing for Chapter 13 bankruptcy, the debtor will be able to keep the creditors' debt collection efforts at bay, which can get quite aggressive.

Debtors should make a decision about a debt relief option only after they understand each option thoroughly. Understandably, many debtors may not be able to see the complete picture, as bankruptcy is one of the most complex areas of the law. Therefore, it may be wise to retain an attorney who can help student loan debtors to obtain debt relief.

Source: Credit.com, "Bankruptcy Could Help You Pay Your Student Loans... But at a Cost," Gene Melchionne, Aug. 10, 2015

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Kenneth C. Rannick, P.C.
4416 Brainerd Road
Chattanooga, TN 37411

Phone: 423-954-7180
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