Student Loan Debt: Should I explore my bankruptcy options?

As a bankruptcy attorney in Asheville, NC, I frequently speak with people having difficulty with their student loan debt.  These folks are sharp enough to figure out that student loan debt is generally not dischargeable in a Chapter 7 or Chapter 13 bankruptcy case.

Even so, I strongly recommend folks having trouble paying their bills to set up an initial bankruptcy consultation in order to understand their options.  Determining what debts should be paid (credit cards, mortgages, car loans, etc) and when to pay them is a huge part of a strategy moving forward, with or without a bankruptcy case.

Here are some other key parts to a long term strategy in managing student loan debt:

Deferments:  If you have suffered some sort of undue hardship (think medical, job loss, etc.), a deferment can postpone your student loan obligations.  The great part of deferring your subsidized student loans is that interest stops accruing during the deferment.  Unsubsidized loans continue to accrue interest during the deferment, however.

Forebearance:  A forebearance can be granted even if you are currently in default status with your lender.  Unlike a deferment, interest continues to accrue on subsidized loans even though your due dates for payment are postponed.

Loan Forgivenss:  Some federal student loans can be forgiven through programs which require you to work for the government or in public service jobs.  I recommend checking out the website www.studentloanborrowerforgiveness.org for more information.

Repayment Plans:  The standard repayment plan for federal student loans is 10 years.  Income-based repayment plans cap your monthly payments and forgive remaining debt after 25 years.

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