Some Oregon consumers who file for bankruptcy may be carrying significant student loan debt. The company LendEDU found that nearly one-third of people who filed for Chapter 7 bankruptcy had student loan debt, and on average, almost half of their total debt was student loans. Even though most student loans cannot be discharged in bankruptcy, the filings appear to be increasingly driven at least in part by these obligations.

Student Loan Hero found that those debts were substantial, with the average graduating student loan debtor in 2018 owing $29,800. In 2019, the national student loan debt reached an all-time high of $1.5 trillion. A Chapter 7 bankruptcy allows all eligible debt to be discharged without any payment. What many people with student loan debt may do on declaring bankruptcy is use the money they would have used in paying off credit card or medical debt on their student loans.

The study by LendEDU looked at data for more than 1,000 debtors who filed for bankruptcy with the assistance of a nonprofit that helps low-income consumers. It did not include figures for Chapter 13 bankruptcy. This type of bankruptcy involves restructuring debts and allows people to pay off debts over a period of three or five years.

Eligibility for a Chapter 7 bankruptcy is in part based on income, and an attorney might be able to discuss this and other options for debt relief with a client. People may also be struggling to pay bills because of medical debt, job loss, or a divorce. There may be several advantages to filing for bankruptcy. It stops creditor actions immediately, including phone calls and lawsuits. A person can also start rebuilding credit after filing.