As many Florida families know, the cost of college has been sharply increasing as of late. That has led to parents and students taking on more debt, potentially subjecting them to an onerous burden that may be difficult to relieve without making substantial sacrifices in other areas of their life. However, in some circumstances, families may find themselves having trouble meeting all of their financial obligations. In that case, it may be possible to file for a Chapter 13 bankruptcy.
When the children go to college, Mom and Dad may decide to pick up part of the expense. Many times, they may co-sign a loan with the child, meaning that they are on the hook to repay the loan in case the child fails to pay. On average, parents picked up about 37 percent of all college expenses in 2011.
Yet in a sign that parents may be beginning to suffer from too many student loans, the average of 37 percent is down from 47 percent in 2010. Moreover, a survey conducted by Fidelity Investments found that whereas 65 percent of parents did not want their children to take out college loans in 2007, and that number has risen to about 75 percent. Instead, parents and children are increasingly finding other ways to pay for college.
Unfortunately, those other methods may not be enough for everyone. In a survey conducted last year, four out of five bankruptcy attorneys reported that they had seen an increase in parents and students who are having trouble repaying their college loans. Yet, unlike other forms of debt, it is very difficult to discharge college loans in bankruptcy. Nonetheless, filing for Chapter 13 bankruptcy may enable a Florida debtor to restructure their other financial obligations, making it easier to repay the student loans.
Source: The Arizona Republic, "College debt especially costly for parents," Anne Ryman, March 17, 2012