Maryland students, like students across the United States, are plagued by debt. The cost of tuition compounded by a poor job market can make the management of personal debt seem nearly impossible. One solution many new graduates are looking to for protection is Chapter 7 bankruptcy. However, bankruptcy may be more complicated for certain kinds of debt relief.

For example, in Maryland and throughout the country, law students are incurring astronomical debt, especially when the cost of education is compared to graduates' earning power. According to recent data, law students are borrowing on average $106,000 for private schooling and $70,000 for public schooling. Some students report debt as high as $150,000 at a time when fewer jobs are available to pay back school loans.

Further aggravating the problem is the fact that law-school debt has increased nearly 50 percent in the last ten years, and debt is now drastically outpacing law school graduates' earning power. Because of this perfect storm of events, more and more law students are beginning to default on their student loan repayments.

One avenue some students have sought out to relieve the burden of crushing student debt is personal bankruptcy. Unfortunately, federal law prohibits bankruptcy courts from discharging student-loan debt, except in very rare cases. The law only allows such loans to be discharged if the debtor can show that undue hardship would be caused by repaying the loan. Moreover, there is already a high standard for proving that a student loan causes undue hardship. This problem is forcing lenders and law schools alike to think long and hard about how they lend and the amount of tuition they charge.

While the noted statistics apply to law school graduates seeking to make ends meet, the perils of unpaid student loans or other forms of debt reach much further, affecting people from all walks of life. If someone is experiencing creditor harassment and is unable to keep up with mounting payments, bankruptcy may be an option worth exploring for debt relief.

Source: Reuters, "Law grads go to court for bankruptcy protection," Leigh Jones and Moira Herbst, Feb. 3, 2012