Bankruptcy Indiana

With so many students entering or going back to college this week and last, all of the Indiana bankruptcy lawyers who work in the Zuckerberg bankruptcy law offices have student loan debt problems on their minds.

One of the Columbus bankruptcy lawyers pointed out that things used to be easier. Then they got worse, and now, in 2011, there’s a glimmer of hope things might get better again.

As an Indianapolis attorney for bankruptcy, I’ve found that a question I’m asked more and more frequently is whether bankruptcy in Indiana can help with student loan debt.  Indianapolis, of course, has become a big college town, with IUPUI, the University of Indianapolis, Butler, Ivy Tech, Indiana Wesleyan, and Harrison College, and others coming on board all the time.

My answer, which I explain on a video on the Zuckerberg Law website is simply “Well…yes – and no.” Since I’ve been in practice for close to 25 years, serving as debt consolidation lawyer offering bankruptcy services in Indiana, I began well before the big changes were made to bankruptcy law in 2005.

You see, going all the way back to 1978, only government and guaranteed student loans were not eligible for discharge in bankruptcy; only private student loans could be forgiven along with other unsecured debt.

The way matters stand today, though, is that in order for a bankruptcy judge to allow your student loans to be discharged when you file personal bankruptcy in Indiana, you need to prove three things to that judge:

•  You’re living at or near the poverty level.
  
• You’ve made a “good faith” effort to repay your loans.
  
• (This one’s the most difficult to prove) It’s unlikely you’ll ever be in position to repay those loans.

As you may imagine, my function in all of this is to help you get all the financial information in order, ready to present to the bankruptcy court so that you have the best chance at getting some student loan debt help. However, as you can already tell, under the new bankruptcy laws of Indiana (the ones based on that 2005 change in U.S. bankruptcy law), that’s not very easy to accomplish.

Meanwhile, the costs of college continue to rise, meaning more and more student debt continues to accumulate. Just the other day I read an article in the Indianapolis Star reporting that tuition at Indiana’s seven public colleges has jumped more than 300% over the time I’ve been a lawyer for bankruptcy in Indiana!

Later this week, I’ll bring Bankruptcy in Indiana readers up to date on Congress’ newest proposal for bankruptcy relief for student loan borrowers…stay tuned.