Your Options When You Cannot Pay Back Student Loans

November 12, 2019 | By Steffens Law Office
Your Options When You Cannot Pay Back Student Loans

During these tough economic times, you may be having difficulty meeting your obligations.  This is particularly the case when you are burdened by student loan debt.  You may be wondering what your options are if you find you cannot meet your student loan payments.  The good news is that there are several options if you find yourself in such circumstances.

Options for Student Loan Debt:

Loan Deferment

You may be able to defer your student loans.  Deferment means that you stop making payments for a certain period of time. You must qualify for a deferment on your loan payments.  You may be able to defer if you can show economic hardship, are returning to school, are unemployed, or you are actively looking for a job.

Depending on your type of loan, the deferment will not only allow you to stop making payments on the principal, but it will also stop interest from accruing on the unpaid balance.  For other loans, you may be able to defer the principal of the loan, but the interest on your loan will continue to accrue while you are not making payments.  The type of deferment you are eligible for depends on they type of loan you have and who your lender is.

Loan Forbearance

You may be able to postpone payments on your student loans by setting up a loan forbearance.  A forbearance is where your lender lets you to stop making payments for a set period of time.  Interest will continue to accrue during your loan forbearance.  This means that your loan balance will be higher when your forbearance ends.  A forbearance is often easier to obtain than a deferment because it is not linked to the type of student loans.

You may be able to get a forbearance for a variety of reasons.  If you have suffered from poor health or unforeseen personal problems, or if you foresee that you will not be able to pay back your student loans within the period for repayment, or your monthly payments are more than 20% of your income each month, you may qualify for a forbearance.  You may be able to obtain a forbearance even if you have defaulted on your student loans.

Loan Consolidation

Loan consolidation means that you put together all of your student loans so that you have only one payment rather than several.  You will also often be able to obtain better loan terms.  You should being by making a list of all of your loans and what the loan terms are.  It is important for you to know what you are being charged on a monthly basis so that you can determine the best option for consolidation.

Loan Bankruptcy Discharge

Bankruptcy is not an immediate option for discharging student loan debt.  You cannot declare bankruptcy on your student loan debt if you have been out of school for less than seven years. But there are other options that our Nebraska bankruptcy attorneys can help you with.

If your loan is not eligible for bankruptcy, it may be eligible for a consumer proposal. Our Nebraska bankruptcy attorneys or a trustee may be able to find a different solution to your financial problem. A bankruptcy filing on your other unsecured debts may make it possible for you to repay your student loan payments on your monthly income.

The most important thing to do is to contact your lender.  They are willing to work with you in order to make student loan repayment easier and more bearable.  If, however, you find that you are unable to make any payments and the debt is truly insurmountable, your best option is to discuss your situation with a knowledgeable Nebraska bankruptcy attorney.  While most student loans are not dischargeable through bankruptcy, your Nebraska bankruptcy attorney will be able to determine what your best plan of action is.