Wednesday, February 8, 2012

The next debt bomb?

Bankruptcy Lawyers Warn of Student-Loan 'Debt Bomb' as Client Caseloads Rise (Chronicle of Higher Education)

     More struggling borrowers are seeking relief from their student loans, according to a survey by the National Association of Consumer Bankruptcy Attorneys.
     In the survey of 860 bankruptcy lawyers, four out of five respondents reported a "significant" or "somewhat significant" increase in potential clients with student-loan debt; nearly two out of five said they had seen their potential student-loan-client caseloads jump by 25 to 50 percent in the past three or four years, and about a quarter had seen caseloads jump by more than 50 percent.
     Most of those borrowers won't have their student-loan debt forgiven. Under federal law, it is almost impossible to discharge student loans through bankruptcy.
     The president of the association, William E. Brewer, Jr., said the results of the survey suggest that student loans "could very well be the next debt bomb for the U.S. economy."


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