Columbus, Ohio, April 05, 2019 (GLOBE NEWSWIRE) -- People ages 18 to 29 collectively owe more than $1 trillion in debt. That’s the largest amount of debt among young people since 2008, and it highlights several challenges facing young Americans.
Attorneys at Ohio bankruptcy firm Fesenmyer Cousino Weinzimmer believe that young people are too often led to believe that Chapter 7 bankruptcy isn’t an option, mostly because student loan debt is often listed as “untouchable” by modern bankruptcy laws. However, the attorneys said, there are some important caveats to this belief.
“Experienced bankruptcy attorneys know that dealing with student debt through bankruptcy isn’t as cut and dry as the public is led to believe,” said Danielle R. Weinzimmer. “In some cases, portions of student debt can be dealt with through bankruptcy.”
Chapter 7 bankruptcy is sometimes referred to as “fresh start” bankruptcy. It helps people tackle unsecured debts, including credit cards, medical bills and installment loans. It also has the potential to prevent or resolve collections, loan deficiencies, repossessions, wage garnishment and civil judgments. In some cases, filing for Chapter 7 allows debtors to keep assets such as cars and houses.
Courtney A. Cousino added that Chapter 7 bankruptcy can create some breathing room to tackle student loans by addressing other areas of debt.
“By declaring bankruptcy on other common forms of consumer debt, students can free up money that they can apply toward student loans,” said Cousino. “This can make a huge difference for someone facing tens of thousands of dollars in student loans.”
Ohio ranks highly among states with the highest concentration of student debt, and the attorneys said that it’s one of many financial obstacles facing young people.
A study conducted last year found that people ages 25 to 34 owed more in credit card debt than in student loans. Millennials in this age group had an average debt of $42,000, around one-quarter of which stemmed from credit cards.
“Student loans get the lion’s share of discussion about debt among young people, but auto loans and credit cards are also playing a role in this trend,” said Thomas M. Fesenmyer. “These types of debt can be addressed through bankruptcy.”
By educating young people about their financial options, the attorneys at Fesenmyer Cousino Weinzimmer think that society can position millennials to be debt-free.
“Young people are resilient, and they have time to cope with the challenges of debt,” Fesenmyer said. “It too often feels like young Americans are encouraged to resign themselves to a life of debt. It doesn’t need to be that way. We just need to give them the tools and knowledge to move forward.”