What steps should you take when you want to get rid of student loans? There are a lot of options. Bankruptcy is probably the easiest option. In addition, it’s easy to qualify for, which makes it popular. In most cases, the law doesn’t permit you to get rid of student loans via bankruptcy.
One exception to this rule is if the student loans are being paid off to repay a tax liability. Even then, and even if the statute of limitations for filing bankruptcy is over, you probably can’t get rid of them via bankruptcy. Some states do allow it, but only to certain extents of default. And you have to file the proper paperwork. But there may be an exception if your lender has made some kind of payment arrangement with the IRS, such as a debt consolidation loan.
In these situations, your bankruptcy attorney may be able to help you with getting one of these types of discharge. Another option is to file an honest-claims-made claim with the SSA or Social Security Administration, which may result in your discharge. If you have bad credit, though, you may find that your claims aren’t accepted. So discuss this with your bankruptcy lawyer.
Another option is to file for an undue hardship discharge. This doesn’t mean that you no longer have to make payments. Rather, this means that your financial circumstances (such as your income and employment) make it impossible for you to continue making payments as they would have been necessary if you had continued to be in school. Usually, this requires something like a permanent disability or a serious illness. However, it may also be based on something temporary, such as having to leave a job because of a car accident or having to adjust your mortgage because you had to get a higher percentage of your income than you’re allowed to take out.
If you meet the above standards and have filed for bankruptcy, you probably know that you are eligible to have the unpaid loan(s) forgiven. The question is how long do you have to wait before you qualify? Usually, after you file for bankruptcy, it’s not long at all before you start the process of getting your debts discharged. In some cases, you can start the process immediately; others, you will have to wait up to four years. However, your lender may be willing to extend the deadline, so speak to them about it.
If you have good credit, you can usually be approved for deferment, forbearance, or even an early repayment plan, which can help you keep a lower monthly payment until your circumstances are better. Many borrowers who file for bankruptcy are able to continue making payments while they are working through their financial difficulties, but there are some students who are denied a deferment or forbearance simply because their circumstances do not qualify for the programs. If you are in this situation, contact a student loan debt consolidation service to discuss the options that you have.
After you file for bankruptcy, you can usually stop paying your loans under certain circumstances, including if your debts are discharged during settlement proceedings. However, these types of discharge student loans often carry a hefty price tag. You can usually get discharged loans if you agree to a payment plan with your lender that is lower than the amount that you would have paid if you had continued to pay for your education. There may be other requirements involved, so talk to a bankruptcy attorney if you’re wondering what other options you have.
If your debts are discharged during a bankruptcy, you can generally begin to pay them off by yourself, using your own money. There are plenty of free online sources that will give you information on how much it will cost you to pay for college, depending on whether or not you have private student loans. It’s important to remember that the interest rates and monthly payments on bankruptcy loans are much higher than those on other forms of student loan debt consolidation, so you will want to do some research before making any decisions. Bankruptcy can be an excellent choice if you’re looking to get out from underneath a heavy debt burden, but you should also be aware that it comes with a lot of risks.