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With student debt at record levels, many college grads have regrets

The cost of higher education in the United States has grown so high, and student loans have become so burdensome, that one-third of millennials say their time would have been better spent working than going to college, a recent Wells Fargo survey found.

For many graduates, debts are overwhelming

In the survey of 1,414 people between the ages of 22 and 32, over 40 percent of respondents characterized their debt as "overwhelming," Forbes reported. As of June 2010, student loans have outpaced credit cards as a leading source of debt for the first time on record in the United States, weighing in at over $1 trillion.

Compounding the student debt crisis is the fact that, for many young graduates, a college degree has not been the guaranteed ticket to income security that they expected it to be. According to the nonprofit American Student Assistance, nearly half of young adults age 25 to 34 are either unemployed or underemployed. With an average student debt balance of over $24,000, it can be difficult or impossible for these borrowers to make ends meet - especially if they also have other debts to pay.

Bankruptcy may help reduce debt load

In some cases, people who are struggling to repay their student loans and other debts may be able to find relief through bankruptcy. Although student loans are rarely eligible for discharge in Chapter 7 bankruptcy, other debts like credit cards and medical bills often are. Thus, by eliminating some debts and reducing their overall debt load, some student borrowers may find that bankruptcy allows them to lower their monthly payments and make any remaining educational debt more manageable.

People struggling with student debt may also wish to consider Chapter 13 bankruptcy, which is also referred to as debt reorganization. Unlike Chapter 7 bankruptcy, Chapter 13 reorganization involves restructuring a person's debts and creating a payment plan that allows certain high-priority debts to be paid off over a period of three or five years. After the borrower completes the payment plan, certain remaining debts may be discharged.

Because Chapter 13 can also be used to help prevent foreclosure, it is often an appealing option for homeowners who are struggling to keep up with their mortgage payments.

Legal help for debt problems

To learn more about bankruptcy and whether it could help you and your family get out of debt and back on the road to financial security, contact a knowledgeable bankruptcy lawyer near you.

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