Bankruptcy, Law Schools, Money, Student Loans

There’s No Easy Way Out Of Student Debt, But That Doesn’t Stop Some People From Feeling Superior

Yesterday, my colleague Staci Zaretsky decided to make the case for why all the people who are dutifully paying off their law school debts should feel superior to those who default on their law school debts, or seek to discharge them through bankruptcy. As she wrote in her post, “Have I ever thought about filing for bankruptcy? Hell no. It might be hard, but I’m accepting responsibility for my actions. I’m paying back what I owe — slowly but surely, with not a single missed payment.”

Well, la, de, f***ing, da. It’s all well and good that Staci has never ever thought about availing herself of a financial protection that is readily used by rich people (and companies) should they make a ruinous financial investment. I’m also really happy that Staci apparently knew everything about what she was getting into before she decided to go into a whole lot of debt to the Western New England University School of Law.

But I’m sticking to the point that most people in their early 20s have no clue about what getting into six figures of educational debt will do to the rest of their lives. I still think that absent parental support of any kind, people in over their heads in debt should be able to file for normal bankruptcy without needing to show undue hardship.

The story shouldn’t be about students looking for an “easy” way out of their obligations. The story should be about helping 22-year-olds fully understand what they are getting into, and looking at all the options available for people to get out of horrible financial mistakes of the past….

First let me a clear up a few things that many people seem to miss when I talk about student debts, default, and bankruptcy.

I defaulted on my loans early on. But I’ve been paying back what I owe consistently for years now. My initial decision to default was a decision I regret, but it was a decision I made based on imperfect information about what I was actually getting myself into. Everybody else was doing one thing, and I was inclined to do it differently. I know that confuses a lot of people who have been through legal education. A lot of “thinking like a lawyer” involves doing what you’re told, just because. I… don’t think like that. Sorry. I made a mistake by allowing my debts to go into default in the first place.

If I had it to do over again, I’d probably do something more like Staci. I’d probably live in a ghetto, and make and follow a budget, and dutifully pay back my loans like a good little soldier. That said, default is not the end of the world. And I really didn’t want to live in the ghetto.

But anybody who thinks that simply defaulting or declaring for freaking bankruptcy is easy has never been turned down for a freaking Discover card. Defaulting isn’t an “easy way out,” as it is neither easy, nor a way out. You still have to pay back the money eventually. God forbid you default on your government loans (which I’ll note I did not); those bastards will come after your paycheck and garnish your wages.

There is no “out.” There are just different levels of suffering.

And most people don’t even attempt “bankruptcy” until they are: (a) f***ing bankrupt, and (b) can’t figure out any way they’re ever going to be able to pay back what they owe. Again, does that sound “easy” to anybody? Does that sound like a situation that can be wished away with Tim Gunn’s magical mantra, “Make it work”? Or does it sound like people in this situation might need more than advice from a reality television show? Bankruptcy isn’t the first option of an entitled adolescent, it’s a last resort for a desperate man.

You know, it seems like being bankrupt and having no way to pay back your creditors when you are still in your twenties is pretty undue hardship. Of course, it’s not. You can’t discharge student debt through bankruptcy absent a showing of undue hardship. “Undue hardship” is, of course, a term of art that becomes a lot easier to understand after you’ve gone to law school. Isn’t it funny that most law students won’t be fully equipped to understand the permanency of their obligations until after they’ve incurred them? Nice scam system you’ve got running there.

All I’m saying is that people who are 22- and 23-years-old, just out of college, are not in the best position to fully appreciate the mountain of trouble they can get into if they take on six figures of educational debt. All I’m saying is that some 25- and 26-year-olds sometimes don’t fully appreciate the grave consequences of not making debt repayment the most important bill they pay every month.

There’s no easy way out of your law school debt. Sacrificing so you can pay back the money is hard. Defaulting is hard. Going bankrupt is hard. People shouldn’t have to live in a log cabin in Russia to make up for a bad decision they made a long time ago.

We’re not indestructible,
Baby better get that straight.
I think it’s unbelieveable,
How you give into the hands of fate.
Some things are worth fighting for,
Some feelings never die.
I’m not asking for another chance,
I just wanna know why.

There’s no easy way out,
There’s no shortcut home.
There’s no easy way out,
Giving in can’t be wrong.

Earlier: Not Even Bankruptcy Will Make Your Student Loans Go Away

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