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Personal bankruptcy may help university grad with extensive debt

Going to college can feel like a rite of passage into a better-quality life for a person in New Jersey. However, many recent college graduates have not experienced the benefits of their degrees, as they are struggling to find work while simultaneously paying back their student debt in New Jersey. Individuals who face student loan debt and other types of extensive debt may find some relief through the legal avenue of personal bankruptcy.

College debt is considered good debt only if it enables a person to improve his or her financial future. In fact, with the right degree, an individual may see his or her initial income increase by 25 percent or more compared with graduates of high school only. The problem that many graduates face is that they have chosen low-paying fields, thus making their investment in a college education a poor one in the end.

Engineering students can expect the highest beginning salaries, which average at about $62,000. Meanwhile, those who study social sciences and humanities have salaries at about $38,000. A helpful way to think about student loan debt is to imagine it as a mortgage where the collateral is one's future income rather than a vehicle or a house. If a person doesn't pay up, he or she can expect his or her future wages to be garnished.

Unfortunately, some people find themselves falling victim to wage garnishment simply because they can't afford their student debt and other loans. Personal bankruptcy often is a responsible option for dealing with this type of situation. Even though it's not common for student debt to be discharged through the bankruptcy process, removing one's other personal debts can free up enough income to more rapidly pay down the college debt so that one can finally experience financial peace in New Jersey.

Source: Forbes, "Student Loan Debt: The Best And Worst Debt To Have", Robert Farrington, April 21, 2014

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