Unlike most other debts, federal and private student loans typically survive Chapter 7 or Chapter 13 bankruptcy. After bankruptcy is over, the student loans, along with any interest that accumulated during the bankruptcy, will still need to be paid.
Federal Student Loans
Federal student loans held by the U.S. Department of Education, come with several repayment plan options. These include standard repayment over 10 years, extended repayment over 20 years, or Income Driven Repayment (IDR) plans that adjust payments based on your income. The Department of Education rarely, if ever, negotiates student loans.
Some repayment plans provide for forgiveness of unpaid student loans once you make a certain number of payments, including shorter repayment terms for some teachers or people who work for the government or non-profits. Borrowers with a total permanent disability can also receive student loan forgiveness, even if they do not qualify for other government disability programs.
For temporary hardships, forbearance can give you short break from your student loan payments.
For more information about the repayment and forgiveness options for federal student loans, visit the U.S. Department of Education’s student loan website: https://studentaid.gov/
Private Student Loans
If you fall behind on your private student loan payments, your options will depend on your agreement with the lender. The lender might offer different repayment plans or forbearance. Forgiveness of the debt, however, is rarely available.
Unlike the Department of Education, private student loan creditors are sometimes willing to negotiate a resolution of the debt with a lump-sum payment, reduced principal balances, or a new payment plan.
Call the Law Offices of Lee M. Perlman to schedule a no-cost consultation about your federal or private student loans.