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Why should a federal court treat a student loan any differently than any other debt in...

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egordon6 | Student, Undergraduate | (Level 1) Valedictorian

Posted October 14, 2012 at 3:31 AM via web

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Why should a federal court treat a student loan any differently than any other debt in bankruptcy proceedings?

Federal student loans are non-exempt debt. That is to say, a federal student loan may not be discharged in bankruptcy court except for the most extreme hardships.

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pohnpei397 | College Teacher | (Level 3) Distinguished Educator

Posted October 14, 2012 at 3:43 AM (Answer #1)

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There are many people who feel that student loans should be eligible to be discharged in the bankruptcy process.  However, they are not eligible.

The most common reason cited for this is the fear of students taking the easy way out.  The fear is that students will run up a lot of college debt and then declare bankruptcy.  Since they would still be young and without many obligations, they might feel that this is a good thing to do and that they still have plenty of time to rebuild their credit rating before they need, for example, to borrow for a house.  This fear of abuse is the main reason why student loans cannot be discharged in bankruptcy.

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