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Bankruptcy may be viable debt relief option in Pennsylvania

An individual's relationships may be going well, and his or her job might be stable and even enjoyable. However, if he or she is struggling to pay down student loan debt, having a peace of mind still might be impossible. This is because falling behind on student debt can lead to issues such as wage garnishment, which can be embarrassing and make a person feel as though his or her finances are spiraling out of control. In such a situation in Pennsylvania, personal bankruptcy indeed can provide much-needed debt relief, especially with today's high levels of college debt not only affecting people's personal economies but also the American economy at large -- specifically, the housing market.

Millions of Americans graduate with student debt, and these individuals may have trouble for qualifying for home loans as a result. This may stifle the progress of the current housing recovery and keep young people from being able to become homeowners. In fact, mortgage applications have dropped by about 20 percent during the past four months alone, compared with the same time period in 2013.

The housing market essentially is built on first-time homebuyers. However, when a potential first-time homebuyer is putting too much of his or her income toward a student loan, he or she doesn't have enough left to cover a mortgage. Today, according to new lending rules, buyers' debt cannot surpass 43 percent of their gross income each month.

Student loans certainly are problematic for consumers in Pennsylvania, especially those who are either underemployed or who are having trouble finding jobs altogether. When a college debt has become too great to bear, negotiation indeed may help an individual to become eligible for loan forbearance or deferment, depending on his or her situation. Filing for bankruptcy also is an option for someone seeking debt relief, as it can eradicate some of the financial pressures of other bills so that college debt can keep being repaid.

Source: The Washington Post, Student debt may hurt housing recovery by hampering first-time buyers, Dina ElBoghdady The, Feb. 17, 2014

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Bryan P. Keenan & Associates, PC

993 Greentree Road
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