As Student Loan Defaults Increase, So Do Lawsuits by Government

In the past few years, there has been an uptick in the number of lawsuits filed by the federal government against people who have defaulted on their student loan payments.

The Sun Sentinel reports that the federal government filed lawsuits against over 4,300 people across the country who defaulted on student loans in 2011, a 43 percent increase over the year before. Florida is not immune from these lawsuits. In fact, last year in the Southern District of Florida, 183 lawsuits were filed against people who defaulted on their student loans, which is nearly double the number of lawsuits filed by the federal government in this district in 2009.

The trend of the federal government going after people who default on their student loans doesn't appear to be slowing, especially in Florida. Federal statistics reported by the Sun Sentinel indicate that over 19,000 Floridians, approximately 10.5 percent, who began student loan repayment 2009, have defaulted in the past two years, which is above the national average of 8.8 percent.

Experts told the paper that with high unemployment resulting in more defaults and the government looking for additional sources of revenue, these lawsuits are likely to rise in number.

Options for Relief

Struggling to make ends meet and defaulting on loans make it seem like there is little that can be done. But this just isn't true. Depending on your situation, bankruptcy may be able to provide much needed relief.

Through either Chapter 7 (liquidation) or Chapter 13 bankruptcy (repayment plan), debtors are able to eliminate most of their debts over time. Which chapter of bankruptcy is right for your (or even if bankruptcy is right for you) specific situation will depend on many variables

It should be noted that student loans are non-dischargeable in bankruptcy, meaning even after bankruptcy debtors are responsible to repay their student loans. This does not, however, mean that bankruptcy is not an option for people struggling with student loans. Bankruptcy can be used to eliminate other debts such as credit card debts or medical bills to free up money to make paying student loans more manageable.

If you are about to or have defaulted on your student loans, speak with an experienced Florida bankruptcy attorney to discuss your situation. Filing for bankruptcy may eliminate your debts, stop any legal proceedings to collect on defaulted debts, and provide you with the fresh financial start you need.