There is $1 trillion in outstanding student loans, which now exceeds credit card debt. Yet, unlike other unsecured debt, an Arizona bankruptcy lawyer will tell you that a Chapter 7 and Chapter 13 bankruptcy cannot relieve a debtor from having to pay them.
As a result of the student loan crisis, it has been reported that Congress may require employers to withhold student loan payments from wages, similar to the way employers withhold taxes. The amount of the withholding would be based on how much a debtor can afford, and debtors may qualify for a reduced student loan payment due to unemployment or under-employment.
This program may also curb abuses by debt collection companies. As any Arizona bankruptcy lawyer will tell you, debt collectors regularly try to collect almost twice the amount of debt you owe. They add high interest, late fees, and very expensive lawyer fees to the debt. By giving the government direct control of a borrower’s paycheck and forcing employers to automatically withhold an affordable payment, there may be less need for the Department of Education to employ aggressive debt collectors.