Question: “I need some serious help. I am a 39 year old single male with over $ 140,000 in student debt. I recently had to quit my job earning $ 125,000 a year due to severe anxiety and depression. It was so upsetting that my doctor put me on all types of drugs to cope. However, I ended up quitting due to severe panic attacks. Now I’m making almost 50% less than what I used to earn and I’m currently Chapter 13 bankrupt. I’m in really bad shape. Please tell me how I can get help with my student loans. I am in dire need of help.
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Reply: You’re not the only one facing high student debt: In fact, Americans have over $ 1.7 trillion in student loans, according to the Federal Reserve. And while it’s rare, it’s possible to get your student loan debt discharged in Chapter 13 bankruptcy, says Rebecca Safier, Certified Student Loan Advisor and Education Financing Expert at Student Loan. Hero. “The court will have to decide that your student loan debt is causing undue hardship. He looks at a few factors to decide if your debt is causing undue hardship, ”says Safier. (You can find details and what to do here.). First, it examines whether paying down the debt would mean that you are not able to maintain a minimum standard of living. Second, they are looking for evidence that your financial difficulties will continue for much of your loan repayment period. And third, he wants to see that you made a good faith effort to pay off your loan before you declared bankruptcy. “Since canceling student loans in bankruptcy is a complex process, it might be helpful to consult a student loan lawyer about your chances of qualifying,” says Safier.
It’s more likely that you and other borrowers struggling with student debt will need to follow a path like this: First, contact your loan officer to see if they can offer relief. Remember, “If you have federal student loans, you don’t have to pay them off until the emergency forbearance ends on January 31st. payments at a certain percentage of your discretionary income, ”explains Safier. It is also possible to completely suspend payments by forbearance or postponement, but you could accumulate additional interest charges during this period. This guide can help you determine if these options might be right for you.
Unfortunately, private loans don’t qualify for federal programs like this, but some lenders will work with you if you run into financial difficulties, says Safir. Some private lenders, for example, may allow you to suspend certain forbearance payments or skip a payment. “Definitely call your loan officer to find out about your options,” says Safier. He may also consider refinancing your private student loans if you can get a lower interest rate.
It’s also essential to develop a debt management plan and budget for the future, says Grace Yung, Certified Financial Planner at Midtown Financial Group. “If you can’t afford basic living expenses, your student loans don’t need to be your top priority. Cover your needs first and do what you can to stay up to date on your student loan debt and avoid default, even if that means asking for multiple deferral or forbearance periods, ”says Safier.
Finally, it is worth considering the loan forgiveness, according to experts. The public service loan forgiveness program allows borrowers who work in certain government and nonprofit jobs to get their federal debt forgiven after making 120 payments (you can see details here). Some employers, as part of their benefits, will also repay part of your student loans. And some borrowers are even looking for unconventional ways to repay their loans, like starting a crowdsourcing campaign and asking friends and family for help.