The North Carolina Bankruptcy Information Blog

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.…

The shrinking job market is squeezing college graduates in record numbers as the number of student loan defaults has not been this high since 1998. Suddenly, today’s college graduates don’t have much of a reason to toss that mortar board in the air.

Adding a few more demerits to the situation is the fact that employers have also cut back drastically on benefits packages that historically included reimbursement for continuing education. What makes the jump in student loan defaults so troubling from the national perspective is that they are difficult to get included in bankruptcy plans.

Understandably, the situation can create a lot of pressure for the youngest, and hopefully most energetic, component of our workforce.…