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Biden v. Nebraska Dissolved: Here’s What Those With Student Loan Debt Can Do for Relief


Biden v. Nebraska Dissolved: Here’s What Those With Student Loan Debt Can Do for Relief

President Biden announced the student debt cancellation plan on August 24, 2022. It was to forgive up to $20,000 per person in federal loans for those with a Pell Grant. This was a response to the COVID-19 pandemic under the 2003 HEROES Act. Trump administration had frozen the loan obligations in 2020 amid the crisis but did not quite erase them. Biden, on the other hand, intended to fully pardon borrowers from the low and middle-income groups. Americans who have already paid off the loans feel ‘unfairly punished’ and have been seeing this as a desperate means of vote grab. However, the Supreme Court did not authorize such a large-scale cancellation of government-funded loans. The court said that the nation’s chief executive has no legal power to waive $430 billion. The plan faced six lawsuits from Republican-backed states. Overall, this led to collective disappointment for NACBA and the borrowers. As of the second quarter of 2023, Americans currently owe $1.76 trillion in private and federal student loan debt. This is more than 1.25% from the second quarter of 2022. If you are one of them with historic amounts of debt, filing for bankruptcy can be a great option. Read on.


Cornyn/Durbin Bill


This is the bi-partisan bill that has been introduced as a FRESH START Through Bankruptcy Act of 2021. It was necessary since student loans were not dischargeable in bankruptcy previously unless it is a rare situation. Students have to prove an extremely tough scenario to quality which is not quite easy. There was no hope for relief until now.


The 45 million Americans who hold more than $1.7 trillion in student debt can protect themselves under this bill. The colleges may also become liable to pay back the government in specific situations. An expert bankruptcy, who understands rights and legal solutions, can help you file a Chapter 7 bankruptcy and assess other best options to help you get back on your feet again.


NACBA Commentary: ‘Diffuse the Student Debt Bomb’


The National Association of Consumer Bankruptcy Attorneys encourages people to talk to their Congressional Representatives and Senators requesting them to sponsor/co-sponsor debt relief via bankruptcy. This was after the Supreme Court had blocked Biden’s forgiveness of hundreds of billions in debt. The court states that the President has overstepped this authority and misinterpreted the Constitution. He mistakenly justified this move under the 2003 Higher Education Relief Opportunities for Students Act (HEROES). The White House justified that it was the global crisis that gave the authority. Sadly, the Act does not allow such an unthinkable modification.


Instead, Biden should have visited Congress to get legislative approval first since the issue is not whether it should have been done but who has the authority to do it. A New York Fed Research found that $440 billion in loans had qualified for relief and 40% of loan borrowers would be free if they were permanently wiped out.


Anyway, the loan repayment begins in October 2023. A U.S. economist predicts that most students who are liable to clear the loan do not have the capacity to do so and consumer spending will cool down. These factors contribute to the likelihood of the American economy pushing into a recession.


Biden, however, announced from the White House, ‘this fight is not over.’ He is working on a new alternative plan to ease people’s hassle. Experts commented that this might also face legal hiccups just like the previous attempt.


What Can a Bankruptcy Lawyer Do?


Given the above situation, working with a bankruptcy attorney is a viable option. They can help you offload your debt when your finances are not in good shape. While it may seem like a daunting process, there are many good reasons to explore this possibility. Different chapters of bankruptcy (Chapter 7, 11 and 13) have unique rules and the attorney helps you sail through them. You will be well-protected from debt collectors and creditors. They also help reduce costly mistakes in paperwork, give you an idea of the exemptions, exercise their excellent negotiation skills and ensure long-term financial benefits. You need a lawyer in the following situations:

  • Exhaustion of your home equity option.

  • Inability to meet debt obligations.

  • Cash outflow is larger than cash inflow.

  • Maxed out credit cards.

A skilled lawyer can pull you out of dire situations with a manageable plan. It helps to ease your mental health and makes room for a new beginning. They will efficiently navigate complex laws on your behalf, evaluate the risks and make sure you are no longer in a distressed situation. All you must do is be transparent and detailed with information. This helps the lawyer to evaluate the best solution for your particular situation while being completely compliant with the bankruptcy codes. Look for a lawyer who is primarily focused on consumer debtors like you seeking relief.

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