Student loan delinquencies on the rise

Financing higher education with student loans seems like a wise investment. Getting more education is supposed to make a person's overall financial situation improve because the job prospects are broader for those with post-secondary education than for those without it. However, many graduates know the difficulty of paying back student loans after graduation. A recent economic analysis revealed that student loan delinquencies have dramatically increased from 2012 to 2013.

Troubles repaying student loans

Consumer credit reporting agency Equifax issues a monthly National Consumer Trends Report detailing the nations' consumers' financial situation. According to the February 2013 report, severely delinquent or charged-off student loans increased by over 36 percent from February 2012. The amount of unpaid student loan debt for the first two months of 2013 reached $3 billion. The report also showed that the total amount of student loan debt was up by about 14 percent from the $ 746.3 billion of February 2012 to reach $ 852.7 billion in February 2013.

Financial experts attribute the sharp rise in student loan delinquencies to the underperforming economy. People are finding it difficult to find employment after they graduate, making it hard to repay loans. Additionally, the cost of tuition is outpacing inflation. People need to borrow more now to finance their educations than in the past - and the monthly payments after graduation can be steep.

Chapter 13 bankruptcy may help

Chapter 13 bankruptcy may be an option for those who are struggling to pay student loan debt. In general, student loan debts are not dischargeable in bankruptcy. A person must show that repaying his or her student loans would create an "undue hardship" for the borrower before the court will discharge the loans, and this standard is very difficult to meet.

However, when a person files Chapter 13 bankruptcy, the court issues an automatic stay on most collection actions - including student loans. People will not be subject to garnishment, property seizure or collection lawsuits while the stay is in effect. The stay does not eliminate the debt, but it does give people time to reorganize their finances under bankruptcy.

People need to be aware that they will still need to repay their student loan debts after emerging from bankruptcy and that interest will continue to accrue on unpaid loans. Chapter 13 can eliminate people's other debts, though, and leave them in a stronger financial position so they can more easily make their student loan payments.

Talk to an attorney

Those who are overwhelmed with student loan debt may feel like they have no options. However, Chapter 13 bankruptcy may be a way to help regain solid financial footing. If you are struggling with debt, speak with an experienced debt relief attorney who can discuss your situation with you and advise you of all of your options.