People who have more debt than they can handle will sometimes turn to bankruptcy for a fresh financial start. This is beneficial to many, but some might find that they don't get as much relief from the filing as they expected. A study done by LendEDU of 1,083 filings shows that many people who file for Chapter 7 bankruptcy have student loan debt that isn't dissolved in the bankruptcy.
Around 32 percent of filers had this type of nondischargeable debt. Of those, student loans accounted for an average of 49 percent of their total debt. Unfortunately, these individuals might not see much of a benefit if they do file for Chapter 7 because they will still have the crushing student loan debt to deal with.
Some people go into this process thinking that they will be able to discharge student loan debt, but they soon find out just how hard it is to get this done. In order to have student loan debt handled in bankruptcy, you have to show that you can't meet a minimal standard of living while paying for the loans. This is done through the Brunner test. On top of this, you have to show that the current situation is going to continue and that you made a good effort to repay the loans.
Earlier this year, the Student Borrower Bankruptcy Relief Act of 2019 was introduced as a way to combat the hopelessness that comes with the inability to discharge student loan debts. Whether a bill like this will pass or not remains to be seen, but one thing is certain - the student loan crisis must be addressed in this country.