For most people in California, earning a college degree is the first step on the path to a successful and rewarding career. Unfortunately for many, it is also the first step towards overwhelming debt. Although student loans usually cannot be discharged in Chapter 13 bankruptcy, the process can still provide vital debt relief that allows borrowers to better focus on their loan repayments.
Across the United States, approximately 44 million student loan borrowers owe a collective $1.5 trillion. While that figure alone is upsetting enough, the outlook is fairly grim for nearly half of those borrowers. In addition to the 250,000 borrowers who currently default every quarter, experts predict that 40 percent of student loan borrowers will default on their loans by the year 2023.
With the average 2017 grad carrying $40,000 in loans, what can be done? In some cases, student loan consolidation can help, although doing so will not lower borrowers' interest rates. For those who hope to lower their interest rates, refinancing might be a better option. Getting ahead by one or two payments can also give borrowers wiggle room if they expect to encounter financial troubles in the future.
Lower interest rates and getting ahead on payments might sound good on paper, but this is not a reality for many California borrowers. When individuals are overwhelmed by debt and are unable to meet their monthly payments, Chapter 13 bankruptcy can be helpful. By organizing debts into a repayment plan that lasts three to five years, people can not only achieve debt relief but they may also develop improved financial habits along the way.