Relief from the strain of student loan debt

Some of our clients come to us for advice about how to handle staggering levels of student loan debt. We educate them about options for relieving the pressure of monthly student loan payments, such as those discussed in this previous post.

CNBC just published an article that provides statistics about student loan debt as well as an exploration of debt relief options for student loans short of filing for bankruptcy or going into default.

CNBC shared some sobering statistics:

•· Number of daily federal student loan defaults: More than 3,000 on average

•· Number of people carrying federal student loans: About 44 million Americans with a combined balance of over $1.4 trillion

•· Number of days you can be late on a student loan before you are considered to be in default: 270

•· Number of student loan borrowers in default: Over 4.2 million as of December 31, 2016, as compared to 3.6 million the year before

•· Delinquency length reported to credit bureaus: 90 days or more

Student loans and bankruptcy

Some people incorrectly think that student loans cannot be extinguished in bankruptcy. It is one of the more difficult kinds of debt to get discharged, but if you can show that the loan payments cause you “undue hardship,” discharge is possible. This is admittedly a high bar, but it is possible to meet it in certain financially challenging situations and should be considered.

Types of possible relief

Short of bankruptcy, however, it may be advantageous, depending on the circumstances, to explore whether other legal options may be better choices.

In addition to bankruptcy, these options may provide short- or long-term relief:

•· Deferment or forbearance allows a break in payments or a temporarily lower payment

•· Repayment plans with reduced payments based on income

•· Rehabilitation out of default status by making nine monthly payments for 10 months straight as long as the payments are made within 20 days of their due dates

•· Consolidation and refinance of multiple student loans could lower interest

Available options depend on whether the loan is federal or private, in which case it depends on the terms of the contract, controlling law and the lender’s practices.

The attorneys at the Albuquerque law office of Giddens & Gatton Law,amp; P.C., advise and represent clients from across New Mexico on student loan relief strategies as well as bankruptcy.