Student Debt burden among the Bay Area population
With over one trillion dollars of student loans outstanding nationwide as of 2013, student debt has now outpaced credit card debt in the U.S.. Many college graduates find themselves overwhelmed with debt. This is particularly true in the San Francisco and San Jose area, where there is a large presence of college-educated professionals who are attracted to high-tech jobs in San Jose, Sunnyvale, Santa Clara, or the other cities of Silicon Valley. Unfortunately, many of these individuals are not aware that bankruptcy may be an option for them.
Discharge of student loans in bankruptcy
It is true that generally, student loans cannot be discharged in bankruptcy unless they “impose an undue hardship on the debtor and debtor’s dependents.” This means that in extreme cases, a skilled bankruptcy attorney can ask the court to issue a discharge of student debts if there is clear evidence of undue hardship. The attorneys at Fuller Law Firm, PC, have extensive experience in advising debtors regarding discharge of student loans.
Aggressive or improper student loan collection tactics
Student loans are often sold to collection agencies. Typically, the collection agencies contact the debtor repeatedly by phone and by mail, often disrupting the debtor’s life. Also, depending upon the circumstances, the collection agencies may be able to garnish the debtor’s wages, levy her bank accounts, or even seize her tax refunds.
Worse still, because student loans are generally not discharged in bankruptcy, many collection agencies representing student lenders engage in improper, or even illegal collection activity. For example, collection agencies generally may not attempt to collect a debt from debtors who are in the middle of a bankruptcy. However, our attorneys have observed such behavior. In the past, our firm has filed a lawsuit in the Oakland Bankruptcy court against a collection agency for this illegal conduct.
If you believe a collection agency has engaged in illegal collection activity, contact our firm for advice.
Bankruptcy relief against student loan collection
Although student loans are generally not discharged, an overburdened debtor may still obtain some relief from bankruptcy. First, if the debtor is overburdened with consumer debt as well as student debt, the debtor may obtain chapter 7 relief, discharge her consumer debts, and then focus her efforts at paying back her student debts.
Alternatively, a debtor may seek chapter 13 relief, and propose a plan to pay her creditors according to her disposable income. While she is in chapter 13, she is protected against collection calls, wage garnishments, bank levies, and tax return seizures.
If you live in the San Francisco Bay Area, and are facing aggressive student loan collection tactics, contact our law firm today for a free initial consultation.