If You Need Additional Student Loan Help
If youre struggling with your student loan debt, first speak with your servicer or lender to:
Discuss repayment options.
Take a temporary payment pause.
Temporarily reduce your monthly payments.
If your problem is with your lender or servicer or youre not getting the help you need, look for a legitimate student loan help organization that offers counseling. Consider these vetted resources for student loan help; they are established organizations with verified histories:
Student loan help resource
Advice on debt settlement, bankruptcy, default and forgiveness. Licensed in Missouri and Illinois.
Many of these organizations offer advice for free. In some cases, you may need to pay a fee, as with a certified nonprofit credit counseling agency or if you hire an attorney.
None of the organizations above calls, texts or emails borrowers with offers of debt resolution.
Offers of help that you have not sought out are likely to be scams. While its not illegal for companies to charge for services such as consolidation or enrollment in a payment plan, those are steps you can do yourself for free.
Avoid any debt relief companies that demand money upfront.
Reducing Student Debt For Clients In Oakland
Are you having difficulty keeping up with your student loan payments? Are you tired of paying too much in interest fees every month? If this is how you feel, dont worry, youre not alone. In the United States, the average college student will graduate with $33,000 of student loan debt. Even if you do land a high paying job right out of school, a significant portion of your monthly income will end up going towards your loan obligations.
If you are struggling with your student loan debt, give us a call to find out how our skilled team of legal professionals can help you obtain debt relief. Call 877-969-7482 today!
How To Use Chapter 13 To Manage Student Loan Payments
Even if you can’t use bankruptcy to eliminate your student loans, you might be able use Chapter 13 bankruptcy to reduce the amount you pay on your student loans for the length of your bankruptcy case, usually 36 to 60 months.
In Chapter 13 case, you get to keep your property. In return, you must devote your disposable income to the full or partial repayment of your unsecured debts over the life of your plan. In addition to unsecured debts, you can pay some secured debts like car payments, through the Chapter 13 plan, too.
You do this by making a monthly payment to your Chapter 13 trustee. The amount of this payment depends on the property you own, your income, and your reasonable and necessary expenses. Most filers must pay their “disposable income” toward unsecured debt for the repayment period. The trustee distributes this payment among your unsecured creditors, on a pro rata basis.
Suppose you make $3,000 per month. Your costs for rent, car payment, utilities, food, and other expenses total $2,700 per month. That leaves a disposable income of $300. If you were not in Chapter 13, you would also be making payments of $400 in student loans and another $300 in credit card minimums and medical bills. You would be in the hole each month by at least $400.
Calculating your Chapter 13 plan payment is more complicated than the above example. Talk to a bankruptcy attorney to find out how much your Chapter 13 plan payment would be.
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Can Student Loans Be Discharged In Bankruptcy
If you want your student loans and other debts discharged outright, youll need to file a Chapter 7 bankruptcy. But keep in mind theres no guarantee your student loans will be discharged unless certain other criteria are met. If you dont qualify to file Chapter 7, you may be able to restructure your student loan payments or have them discharged in a Chapter 13 bankruptcy. Once your Chapter 13 bankruptcy ends , youll be responsible for repaying your federal student loans if you werent able to prove undue hardship.
Total And Permanent Disability Discharge
If you are unable to work because of a total and permanent disability, you may be eligible for a Total and Permanent Disability Discharge of your Federal Family Education Loans , Perkins Loans, Direct Loans, or Teacher Education Assistance for College and Higher Education Grant service obligation.
For more information on how to apply for total and permanent disability or to check the status of your application you can sign up and create an account on DisabilityDischarge.com or call 888.303.7818 for assistance.
You can also visit StudentAid.gov for more information on the Total and Permanent Disability process.
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Calculating When The 7
If you are contemplating filing for personal bankruptcy or making a consumer proposal in the hopes of discharging your student loan debt, you should seek the help of a Licensed Insolvency Trustee to ensure that you have satisfied the 7-year waiting period.
To be prudent, if your goal is to have your student loans discharged, you should calculate the start date on the end of your education as the latter of
- The date you actually ceased attending school, or
- the last day of your exams for your final semester
You might want to add 30 to 90 days out of an abundance of caution.
Will Student Debt Relief Help The Economy
Some economists argue that relieving student loan debt will help boost the economy. However, William Chittenden, an economist at Texas State University, writes that the economic benefits of canceling student debt might be modest at best.
If all US$1.5 trillion in federal student loans were forgiven, the average borrower would have an extra US$393 per month, Chittenden writes. It is estimated that the economy would only grow by about $100 billion, or about 0.5%
Chittenden argues that student debt relief should be targeted toward borrowers that typically owe less than $10,000 but who are more likely to default on their loans. Demographically, this would benefit people of color and women the most, since women on average owe more than two-thirds of outstanding student loan debt, and 85% of Black college graduates owe money on student loans, compared to just 69% of white college graduates.
Read more:Canceling student loan debt will barely boost the economy, but a targeted approach could help certain groups
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Most Back Taxes And Customs
This generally includes income taxes, Social Security taxes and penalties you owe, or unpaid withholding tax for your employees.
Although most back taxes cannot be discharged in bankruptcy, you may be able to have taxes discharged if they are for a return due 3 or more years ago and you meet certain other qualifications.
If you owe significant back taxes you cannot pay in a reasonable period of time, you may want to ask a tax attorney or other professional about an Offer in Compromise, or OIC, or other alternatives.
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Concluding The Tax Debt Debate
We have finally answered the epic question.
Does bankruptcy clear IRS debt?;
The answer is, it can. But you need to know the facts in order to make an educated decision.
Take time to educate yourself or consult a professional to decide if bankruptcy is the right choice for you.;
We can help you decide if bankruptcy is the right choice for you.;
Contact us today for a free consultation!
Ready to secure your financial future? Subscribe Today For Tax Knowledge Tomorrow
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If Youre Drowning In Student Loans With No Solution In Sight You Might Have Considered Declaring Bankruptcy
Unfortunately, discharging student loans in bankruptcy can be one of the most challenging tasks in whats already a complicated legal process.;Still, trying to get rid of student loans in bankruptcy can make sense for some borrowers. If you think it might be worth the effort, heres what you should know before getting started.
Why Student Loan Discharge In Bankruptcy Poses A Challenge
Heres why student loans are so onerous to get rid of in a bankruptcy filing:
Its cost-prohibitive. As Webber says, the whole process is expensive for borrowers who can expect to pay several thousand dollars for filing and attorneys fees.
Bankruptcy courts are notoriously stringent. After filing for bankruptcy, a second action,;an Adversary Proceeding, must be filed to ask the court to find that the debt would prove an “undue hardship” to repay. Then, borrowers have to prove they meet the standards of “undue hardship,” a concept thats left to bankruptcy judges to interpret.
The undue hardship standard is especially difficult for federal student loan borrowers to prove due to the safety nets offered to those borrowers, such as payment pauses and repayment plans.
To meet the standard, cases typically must pass the “Brunner test,” named for a student who attempted to discharge her student loans in bankruptcy less than a year after earning her master’s degree .
To pass the Brunner test, loans must meet these conditions:
Payments would keep you from maintaining a minimal standard of living.
Youre unlikely to earn enough money to make payments on your loans in the foreseeable future, usually due to a disability.
Youve already made good faith efforts to repay your loans such as making some payments or negotiating a lower payment plan.
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The Brunner Test Involves Three Prongs:
- You must currently be unable to repay the student loans and maintain a minimal standard of living for yourself and your dependents.
- The circumstances that prevent you from repaying the student loans must be likely to continue for most of the repayment term of the loans.
- You must have made a good faith effort to repay the student loans, including using options for financial relief, such as deferments, forbearances and income-driven repayment.
The Totality of Circumstances Test omits the third prong of the Brunner Test and is more flexible.
In addition, the borrower must file the undue hardship petition in an adversarial proceeding, where the lender can challenge the claim of undue hardship.
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The Totality Of Circumstances Test
A few states use the “totality of the circumstances” test. It might seem that this is an easier standard to meet because it doesn’t consider whether youve made a good-faith effort to repay your loans, such as consistent attempts to obtain employment, maximize income, and minimize expenses. However, the totality of the circumstances test also includes an any other relevant facts and circumstances component that could be broadly interpreted.
Under either standard, the bar to clear is high, especially for federal student loans, for which the government specifically states that the burden of proof is on the debtor to prove undue hardship.
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Two: Student Loan Debt & Waiting Periods
If you owe monies on your student loans and you wait long enough, it is possible for you to eliminate this debt by taking advantage of either a consumer proposal or personal bankruptcy. If, however, you do not satisfy certain waiting periods under federal law, your student loan debt will survive your bankruptcy or your consumer proposal. Therefore, you must proceed very carefully when student loans form all or a part of your debt.
When we talk about student loans, two waiting periods are key to the timing of making a consumer proposal or filing for personal bankruptcy:
Canadas insolvency laws punish those with outstanding student loans who file for personal bankruptcy or make a consumer proposal within seven years of ceasing to be a student.
Consider Consulting With An Attorney
You’ll find the Brunner test or other standards applied to Chapter 7 and Chapter 13 debtors in lots of court cases. Knowing how the court in your jurisdiction ruled previously could help you determine the likelihood of your success.
If you have a substantial amount of student loan debt, it might be worthwhile to consult with a local bankruptcy attorney. The chances are that if you decide to litigate either the dischargeability issue or assert a defense to the loan in bankruptcy court, you’ll need an attorney to represent you.
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Bankruptcy Should Only Be Considered As A Last Resort
Bankruptcy will obliterate your credit score and remain on your record for as long as 10 years, severely limiting your ability to borrow money. If you file for Chapter 7, all of your possessions may be liquidated to pay your creditors. If you file for Chapter 13, youll be placed on repayment plan and may be allowed to keep your possessions. Either way, you wont be able to obtain new lines of credit. It may even prevent you from getting a job.
Be aware that there are many fraudulent debt consolidation and student loan forgiveness companies that will charge fees to file free paperwork for you. Practice caution with any company that asks for money up front to remove your debt.
If youre considering filing for bankruptcy, hopefully your student loan repayment isnt the primary cause, especially if you have federal loans. Federal student loans have a number of plans and programs to help borrowers from defaulting on their loans. If youre carrying serious debt beyond your student loans, your debt-to-income ratio will help you qualify for an income-driven repayment plan and your student loan payments could drop as low as $0.
IonTuition is an expert in the student loan repayment space and specializes in helping borrowers avoid bankruptcy.
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Student Loans And Bankruptcy
Youve finished school, but are having trouble finding work in your field. You dont want to fall behind on your student loan payments, but its hard to keep up with them when cash is limited and you have other bills to pay.
You might be wondering how bankruptcy can affect your student loan payments. Here are some important facts for you to consider about student loans and the bankruptcy process:
- Unlike other unsecured debts, filing for bankruptcy will not eliminate your student loan payments, unless you have been out of school for at least seven years.
- If you have been out of school for over seven years and are considering bankruptcy, you will be able to discharge, or eliminate, the loans, as long as your creditors agree.
- As an alternative to bankruptcy, you may also consider filing a consumer proposal, which will reduce your monthly debt payments and allow you to repay only a portion of your total debt. Just like bankruptcy, you must be out of school for at least seven years to include your student loans in a consumer proposal.
- Only a consumer proposal or filing for bankruptcy can reduce or eliminate your student loan debt obligations.
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Wipe Out Secured Debt
If you can’t afford a payment that you secured with collateralsuch as a mortgage or car loanyou can wipe out the debt in bankruptcy. But you won’t be able to keep the house, car, computer, or other item securing payment of the loan. When you voluntarily agree to secure debt with property, you must pay what you owe or give the property back .
Qualifying For Student Loan Bankruptcy Discharge
A discharge of your student loans may be possible if you prove you have an undue hardship that prevents you from making student loan payments, orwith private loansif the loans did not provide an educational benefit.
With federal student loans, there is no standard set of guidelines for demonstrating undue hardship. Most courts rely on the Brunner Test, which requires you to prove that:
- You wouldnt be able to maintain a basic living standard if you made loan payments.
- Your financial hardship will last an extended amount of time.
- You made a good faith effort to repay your loans before filing for bankruptcy.
Not only are these circumstances extremely challenging to prove, the Brunner Test is somewhat subjective. Not only every state, but every jurisdiction will have different standards in determining whether the Brunner Test applies, said Leslie Tayne, a financial attorney and the founder and managing director of Tayne Law Group, in an email to The Balance.
Its not the only test that exists, however. The courts of the Eighth Circuit, for example, use the totality of circumstances test, which looks at the borrower’s overall situation. This benchmark is considered less restrictive than the Brunner Test.
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Bankruptcy Is A Powerful Tool For Debtors But Some Kinds Of Debts Can’t Be Wiped Out In Bankruptcy
By Cara O’Neill, Attorney
If you’re facing severe debt problems, filing for bankruptcy can be a powerful remedy. It stops most collection actions, including telephone calls, wage garnishments, and lawsuits . It also eliminates many types of debt, including credit card balances, medical bills, personal loans, and more.
But it doesn’t stop all creditors, and it doesn’t wipe out all obligations. For instance, you’ll still have to pay your student loans and arrearages for child support, alimony, and most tax debts. Read on to learn more about:
- what you can expect in both Chapter 7 and Chapter 13
- the benefits offered by Chapter 13 alone, and
- things that can’t be accomplished by filing for bankruptcy.
If you’d like step-by-step guidance through the bankruptcy process, read What You Need to Know to File for Bankruptcy in 2021.