California residents may not be aware that, between 2001 and 2010, average student debt for law students increased 50 percent. That means that most law graduates' earning power is nowhere near enough to pay their student-loan debt in a timely manner. Additionally, bankruptcy filings by college graduates in general rose by 20 percent between 2005 and 2010.
For law school students in California, the debt load is particularly heavy because of a diminishing job market. More and more law graduates are filing for bankruptcy protection while they take other jobs to help chip away at their onerous debt.
One 26-year-old law student filed for Chapter 7 bankruptcy just before graduating because her chances of landing a job were so low. She currently lives with her mother and was able to find employment through a temporary employment agency, but she still may default on her loans. Since the young woman studied bankruptcy law in college, she opted to represent herself in bankruptcy court and discovered just how difficult federal law makes it to prove that student-loan debt will result in undue hardship for the debtor.
As readers may know, federal law prohibits courts from discharging student-loan debt except when it can be proven that the debt would cause undue hardship.
On average, law students borrow $70,000 to study at a public school and $106,000 to study at a private school. That there are so few legal jobs floating around in California or anywhere else has caused many of those students to default on their loans.
Residents in the Escondido area are likely confronting similar debt problems. For many individuals, Chapter 7 bankruptcy protection may be a much needed relief to help individuals restructure their debt and get their finances back in order. California debtors deserve to have some breathing room while they do their best to make a fresh financial start.
Source: Reuters, "Law grads go to court for bankruptcy protection," Leigh Jones and Moira Herbst, Feb. 3, 2012