Statistics reveal that Americans owe approximately $1.6 trillion in student debt with 44.5 million of the individuals facing monthly student loan bills. While an average undergraduate borrower in 2017 owed $28,650, more than 2.5 million individuals have $100,000 or more in combined debt. These serious debts can cause some individuals to struggle with substantial debt.
Unfortunately, to make matters more complex, many individuals with student loan debt are unable to discharge the amount in Chapter 7 or Chapter 13 bankruptcy. That is unless a person can establish that being required to repay student loan debts would result in an undue hardship. The exact test that a court will apply to determine if a hardship exists depends on where a person lives. Because many bankruptcy courts are simply unwilling to discharge student loan debt in bankruptcy, it is important to learn some proven strategies to handle this amount.
Refinancing and Consolidation can Help
Refinancing offers people facing student loan debt the opportunity to obtain a better deal on their loans. With student loan refinancing, private lenders can consolidate both federal and private loans into one larger loan at a lower interest rate. If you have a good credit rate and good career opportunities, refinancing can be a powerful way to gain better control over the amount that you owe. Refinancing, however, is not a great idea for everyone. For example, people who are already benefiting from federal debt relief could lose potential federal benefits from refinancing.
Government Support Debt Relief Programs
The federal government offers several programs that were created to help reduce student debt or make the payoff of debt more manageable. Graduates who have monthly loans that are classified as high when compared to their income can obtain relief in the form of income-driven repayment plans, which are capped at a percentage of the borrower’s income. Despite the advantage of making it easier to manage debt, these programs come with the downside that a person will require a longer period to pay off a loan. Consequently, a person who engages in one of these programs will likely end up being required to pay more in interest.
Student Loan Forgiveness
Bankruptcy often is not an available option to discharge student loan debt, but the government in some situations will forgive this amount. Although not particularly common, the Department of Education offers cancellation, discharge, and forgiveness programs. In addition to being difficult to qualify for, small errors in registration paperwork can leave a person disqualified from having the debt discharged. Some companies have also begun to offer student loan repayment as a perk of working there. While these programs are often not able to discharge all of a person’s debt, this benefit can help to take control of student loan debt.
Speak with an Experienced Bankruptcy Lawyer
If you are interested in pursuing bankruptcy, it can help to speak with an experienced lawyer. Contact the Adam Law Group today to schedule a free case evaluation.