The North Carolina Bankruptcy Information Blog

For many recent graduates from colleges and universities all across the country, any job must feel better than no job at all. Shortly after graduation in May 2011, thousands of grads from Washington State to UNC-Wilmington, turned their back on student life and turned back on their computers only to begin their first official job searches—sending out e-mail-loads of resumes in what would become for many a months-long search for work….any work.

Once the summer had started in earnest many of this newly-minted workforce found that they had applied for dozens, if not hundreds of positions, only to hear back from a handful of potential employers, most of whom would likely reject them about as quickly as these same students were running through their bank accounts, savings, leftover student loans or whatever their parents could provide, during only the very beginnings of what would become an entire season of  just job searching.…

These summer months are shaping up (again) to be tough times for recent college graduates. This latest round of job seekers continues to face high unemployment and mounting debt. So what happens when these poor economic conditions coincide with payment deadlines for sometimes astronomical educational loans? One word: defaults. In the end, this feeling of financial helplessness leaves many recent grads reeling, and rightfully so, in an economic climate may mean they will never be as successful or financially secure as their parents.

According to a recent article in The Huffington Post, chronicling graduates’ search for better jobs (albeit without hope for a better future), this recent post-recessionary phenomenon may signify a broader trend.  “Historically, college graduates weather periods of economic recession better than their less-credentialed counterparts.…

Student loans, except in a few rare instances where a severe personal hardship can be proven and allowed by a judge, are not dischargeable in bankruptcy. Thankfully, student credit cards can be discharged in a Chapter 7, because banks work tirelessly to contribute to the spending habits of America’s college students.

The overarching appeal of the college lifestyle to credit card companies is the irresponsible approach (no offense) most 18 to 22-year-olds employ toward handling money. Hey, it’s just how it is.

It is also key for banks to establish a relationship with young adults early, often as soon as they turn 18.…

For most recent college and post-college graduates, the hot summer months are a chilly reminder that student loan repayment deadlines are mere months away. These impending debts arrive at some of the toughest economic times ever for the newest round of job seekers, as the nation, and especially its youngest workers, continue to face record unemployment and mounting consumer debt. So what happens when poor economic conditions coincide with mandatory payback timelines for budget-busting student loans? Two words: loan defaults. Now, the countdown is on as many recent grads will soon exceed the 270-day window for paying back their educational debts, beginning a bad precedent for staying current in an economy that may or may not be heading into another recession.…

The summer months are shaping up to be tough times for recent college graduates. This newest round of job seekers continues to face record unemployment and mounting consumer debt. So what happens when these poor economic conditions coincide with mandatory payback timelines for astronomic educational loans? One word: defaults. In fact, many recent grads will soon exceed the 270-day window for beginning paying back their student loan, triggering a default on their mounting student loans—loans that often have high interest rates.

So what can you do if you can’t pay your student loans or have already defaulted?

Categorize Your Loan: Private or Federal
In these default scenarios, the type of student loan can make all the difference.…

There was very important bill passed this week in Washington.

No, not that one.

Attached to the monumental health care bill was a significant alteration to the way student loans are handled by the government.

We have covered this topic several times here on the blog (use the search tool), which is critical to those considering bankruptcy because as of now, outside of very special and rarely granted conditions, student loans are not allowed to be discharged.

Arguments have mounted recently about the role private banks have in backing federal student loans. The primary issue is that the government guarantees close to 90 percent return for the private lender who funds the loan.…

There is so much we do not know about the things that put us into debt. From credit card fine print to car lease agreements and as the last few years have demonstrated, even the most basic facts about our home loans.

To anyone with the ability to fog a glass, it is more than evident that our collective ignorance on these matters is precisely what causes our country to carry so much personal debt. And despite the government’s best effort, whether in credit card reform or mortgage assistance programs, the only way to solve our financial problems is for the American consumer to educate itself as to the practices, jargon and bureaucracy that obfuscate the critical, debt-inducing rules of credit and loan products.…

As NPR reported this week, more than a third of students enrolled in post-high school classes borrow money to advance their education. In sum, the federal government guarantees most student loans at a cost of $618 billion.

To discourage students from simply walking away from their debt, federal bankruptcy law makes it difficult to discharge a student loan debt—even in Chapter 13 bankruptcy—except in cases of undue hardship. Debtors must prove that the loan presents an undue hardship, such as an injury that prevents the type of work for which the degree was earned. Additionally, the debtor must have made a good faith effort to repay the loan.…

For so many years people have held the view that an education is one of the best investments you can make, and therefore it is prudent to spend whatever it takes to get the best education possible. It’s true that a college diploma will, on average, result in improved earning power for degree holders, and the improvement is often dramatic. Nonetheless, educations are so expensive that it’s impossible for most people to get one without taking out student loans. Even though the situation affects so many, it seems that nobody is out there is telling the whole truth. If the colleges and universities don’t do it, what could possibly motivate the student loan industry to mess with their own success in an enormously profitable field?…

When Francisco Espinosa filed his Chapter 13 bankruptcy petition, he must have had no idea his case would end up before the United States Supreme Court. Espinosa’s case was just another run-of-the-mill consumer filing, except for one thing . . . the repayment plan he proposed provided that he would pay back $13,250 to United Student Aid Funds, Inc. (USA Funds), the holder of his student loan debts. But he actually owed USA Funds $17,832. The bankruptcy court confirmed the plan. The trustee then sent USA Funds a notice stating that its claim “would be paid as listed in the plan” if it did not dispute the amount within 30 days.…