How Many Law School Graduates File for Bankruptcy?
The economy has been hard on all segments of society. The legal profession is not exempt from these difficulties, and many law school graduates are finding it tough to land a job after they finish school. But add to that the mounting student loan debt and low starting salaries, and many law school graduates are a perfect candidate for bankruptcy.
The catch, of course, is that student loan debt is nondischargeable in bankruptcy, meaning that any student with debt can still file for bankruptcy relief, but will have to carry those student loans with them forever, while most similar types of debt are dischargeable.
There are no definitive statistics on the number of law school graduates that have filed for bankruptcy. However, those in the know suspect the number is increasing. In the last decade, law school tuition and average debt out of school has increased 50%, and earning power has decreased in the same period. As a result, many law graduates are faced with a difficult scenario, and no relief from the Bankruptcy Code.
Statistics show that defaults on student loans have increased substantially in the past three years
Those who choose to file for bankruptcy relief can still get some protection, however, by filing for Chapter 7 or 13 bankruptcy. By relieving other debts, which may be caused by high student loan payments, many graduates are finding some relief in monthly payments due to bankruptcy.
For those with student loans as a majority of their debt, Chapter 13 could be the best solution. Permitting students to make manageable payments toward their student loans under the protection and supervision of the court, they can learn to pay these loans off, and get a discharge of other debts as well.