Student Loan Debt: What is the difference between a forbearance and deferment?

As a bankruptcy lawyer in Asheville, NC, I am troubled by the rising student loan debt our country is facing.  Bankruptcy laws seem insufficient in many cases because most of the time a student loan debt cannot be discharged in a Chapter 7 or Chapter 13 bankruptcy.

My best advice for someone to struggling with student loan debt is to look into their options for solving all their debt problems.  Frequently, we can combine a bankruptcy case with a plan to seek a forbearance or deferment on their student loans.

The terms forbearance and deferment are usually used interchangeably.  In fact, your loan servicer probably uses them in the same manner.  However, if you have a subsidized Stafford loan (the most popular type of student loan), the US government will pay the interest charges during a deferment but not for a forbearance.  On a $50,000 loan, the interest charges in a forbearance for two or three years grows exponentially until the loan is paid off, making a difference of over $10,000.  Moreover, a forbearance can be granted over the phone, whereas you need to seek a deferment in writing.

The bottom line is that it matters if you have a subsidized stafford loan.  If you can’t pay your student loan debt, and in live in Western North Carolina, contact me for an initial consultationThe appointment costs $150 and includes a 30 minute telephone consultation and a detailed student loan analysis by email.  We can come up with a financial plan which works for you by exploring your best legal options.

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