Since the election of the Biden-Harris Administration, student loan forgiveness has been a major topic of discussion. Recently, the Education Department announced that applications are open Student Debt Relief Plan. However, due to a court order, the debt discharge has been paused. Our bankruptcy team detail the program's current situation, what student loan forgiveness means to those holding student debt and who have recently filed for bankruptcy or considering filing for bankruptcy.
The Current State of the Student Loan forgiveness program
Currently, the program is facing a pause in the discharge of student debt due to a court order. The program was initially designed to forgive up to $10,000 of federal student loan debt per borrower, focusing on those historically disadvantaged by the education system, such as low-income borrowers and individuals with disabilities. However, a group of 16 states and the Chamber of Commerce filed a lawsuit against the Biden Administration, arguing that they do not have the authority to forgive student debt without congressional approval. The federal student loan payment pause has been extended through Dec. 31, 2022.
What Does Student Loan Forgiveness Mean for Those in Bankruptcy?
The discharge of student loan debt can have significant implications for those currently in bankruptcy or considering bankruptcy. Student loan debt is not typically dischargeable in bankruptcy, but if a borrower successfully applies for student loan forgiveness, it could eliminate their remaining student loan balance and provide much-needed relief for their financial situation. However, it is essential to note that the current pause on the program's discharge of student loan debt may affect an individual's eligibility for student loan forgiveness in bankruptcy.
Overall, the Biden Administration's Student Debt Relief Plan has the potential to provide a path toward financial relief for those with student loan debt. With the current pause on student loan discharge, it is vital to keep up with updates on the program and consider all available options for managing student loan debt. It is important to consult with a financial professional and consider all options for managing student loan debt.
Have Questions About Student Loans and Bankruptcy? Wagner Law Office, P.C. Can Help.
If you have questions about student loan forgiveness and how it may affect your bankruptcy case, Wagner Law Office, P.C. can provide guidance. Contact us today to set up a consultation and explore your options for managing student loan debt.
Contact us at (303) 536-5124 or through our online contact form.