Another school year is coming to a close for Colorado-area residents, with another full class of graduates ready to enter the workforce. While it can be an exciting prospect to finally start receiving a paycheck for those graduates who have obtained employment, it can also be a period of uneasiness and concern when the student loan bills come due shortly after graduation.
Student loan debt can be crippling for many new grads, or even those who have been out of school for quite some time. This was particularly true for some borrowers, who were recently surprised to learn they were considered in default after a person who co-signed on their student loans died or filed for bankruptcy.
The story recently surfaced that showed several borrowers were automatically placed in default, and told they had to repay their loans in full, even when several were current on their monthly payments, simply because of the circumstances of the co-signer. The defaults placed the borrowers in terrible circumstances, as most are not able to pay off the loans immediately.
Even for those who do not face the situation described above, high student loan debt can be crippling. Many consider filing for bankruptcy, although student loans can be very difficult to discharge in bankruptcy.
Nonetheless, personal bankruptcy can still provide benefits to individuals who need to eliminate debt. Often times, individuals get deep into other debt because a great amount of their income goes to student loan debt, and bankruptcy can be an effective way to discharge this other debt, even if it does not apply to the student loans. Accordingly, individuals should consider all of their options when they are deep in debt, including bankruptcy.
Source: CNN Money, "Grads hit with defaults when co-signers die, go bankrupt," Blake Ellis, April 22, 2014