The burgeoning student loan debt is taking worrying proportions in the US. To give an idea, about 44.2 million borrowers collectively owe a whopping $1.48 trillion in student loan debt. In 2017 alone, the student loan debt increased by six percent as compared to that in 2016. Alarmingly, the total student loan debt stands at $620 billion. This is more than the credit card debt in the US!
Why is student loan debt a huge burden?
There are 32.1 million borrowers who have taken Direct Loans to the tune of $1,003.3 billion; 15.7 million borrowers have taken FFEL (Family Federal Education Loan) of $320.5 billion; 2.6 million borrowers have taken Perkins loans of $7.9 billion; and 42.3 million borrowers have taken all federal loans of $1,331.7 billion.
Imagine, if only a small percentage of these borrowers default on payment, it becomes one of the major factors of student loan debt burden. It is not surprising that, today, the student loan default rate stands at 11.2 percent.
Discharge student loan debt
If students find it difficult to repay a federal student loan debt, they can opt for student loan discharge. This discharge relieves them from further repayment obligations. Both Direct Loan and FFEL programs offer these provisions.
However, taking recourse to Chapter 7 bankruptcy or Chapter 13 bankruptcy to wipe out the student loan debt may not work, unless the students can prove that they are unable to pay due to undue hardship. Courts differ on what constitutes undue hardship, taking recourse to Section 523(a)(8) that presumes that qualified student loans will not be discharged. This makes the courts reluctant to grant student loan debt discharge.
Some courts use the Brunner test that permits the borrowers to discharge a student loan if they meet all of the below-mentioned factors:
● Poverty: Inability to maintain a minimal standard of living due to borrowers’ current income and expenses that don’t allow them to repay the student loan debt.
● Persistence: Their poor financial condition will continue to persist for a major part of the repayment period.
● Good faith: The borrowers have made genuine efforts in good faith to repay student loan debt.
Brunner test comes across as a fair test to judge the inability of borrowers to repay student loan debt. However, the court will take individual facts and circumstances into account before arriving at a decision.
How does student loan debt settlement work?
Successfully negotiating student loan debt with creditors, before the matter gets legal, is an option that must be availed by the borrowers, if they meet the eligibility criteria. It is not only the best option but quite achievable too. And for the borrowers, it may mean paying less than what they originally owed. So, are all borrowers eligible for student loan debt settlement?
Not exactly. For being eligible, borrowers should not be current on their loans and should not have funds to pay down their debt due to lack of funds. They are eligible only if they default on student loan repayment.
The time for settlement is when the borrowers have gone into default and before any legal process is initiated by the creditors. In a settlement, the creditors strike a deal and agree to ‘settle’ for an amount that is lower than what was loaned to the borrowers, just so they avoid the hassle of collections, legal processes, etc.
Why hire David Galler as your student loan attorney?
We, at Galler Law, based in Atlanta Georgia, have earned a name for ourselves in dealing with all issues related to student loan debts. Our seasoned team of lawyers, having years of experience in dealing with varied legal issues, possess the required expertise to guide the student borrowers through the intricacies of legal processes involved in such debts.
Just to give you an idea, we…
…help you with debt repayment issues by suggesting the lowest possible student loan repayment plans.
…are adept at seeking discharge or cancellation of for your student loans, depending upon your case.
…possess years of experience in negotiating with creditors to lower the repayment amount.
…can defend you against any legal action taken by creditors for non-payment of the loan.
…know exactly how to deal with the all kinds of harassments meted out by creditors.
Once you contact us, we make a thorough assessment of your situation and suggest the best way out. Our quick and personalized service will keep you mentally at ease and totally tension-free. What’s more, we are available 24/7 to return your calls.
Galler Law’s sole mission is to help you out of this financial debt trap and restore your financial freedom and peace of mind in the quickest possible way.
Student loan default and garnishments
You can default on student loan repayment by neglecting to repay for over 270 days. This may result in garnishment.
So, what does it mean to you?
A chunk of your paycheck, income tax refunds or Social Security income is taken to pay back your loan balance. Not only this, it may also adversely effects on your credit score.
In such a scenario, timely action is of the essence. Contacting Galler Law immediately will save you from administrative garnishment since it is time-sensitive. We provide correct guidance to help you get into programs that will ease your repayment burden based on your income. You can even get a discharge if your personal circumstances so dictate.
Student loan repayment options
It usually begins like this. When student borrowers raise a student loan, they readily agree to the terms of payment thinking, once they complete their studies, they will get gainfully employed and be in a position to repay the loan. However, as they say, there are many a slip between the cup and the lip. By the time borrowers complete their studies, a whole new set to financial challenges face them, preventing them from fulfilling their creditor’s contractual obligation.
There are four types of federal loan repayment plans. Let’s see what they are:
- Standard repayment: In this repayment plan, the borrowers need to make monthly payments to repay the debt within 10 years.
- Extended repayment: In this, the period of repayment of the debt can extend to a maximum of 25 years. This also requires monthly payments. The only difference is the monthly repayment instalment may increase over time.
- Income-sensitive repayment: This repayment plan considers the burrowers liabilities and obligations. Income, number of family members in their household, etc., are taken into account to determine the amount of monthly payments.
- Graduated repayment: In this plan, the borrower has to make monthly payments over 10 years. However, in this case, the amount of repayment gets escalated every two years, throughout the period of repayment.
- Loan consolidation: This simply means taking a fresh loan to pay off the existing loan. This makes the monthly payments more manageable but is risky too.
- Deferment or forbearance: In this, the borrowers can temporarily stop making student loan payments up to a period of 12 months at a time. Note that the maximum time limit is 36 months.
Student loan cancellation
There are only limited circumstances under which you can apply for a student loan cancellation. However, it is still the most complete way to deal with this debt. What’s more, the borrowers can get discharge outside of bankruptcy.
A few reasons that make the borrowers eligible for student loan cancellation are:
- School-related discharge: If the borrowers can show that there are some serious problems afflicting the school that they have attended, it can get their student loan cancelled. And not liking the school is not a valid reason for that!
- Public service job: Have you worked in a public service job, like military service (at any time)? They you are eligible for the student loan cancellation.
- Disabilities or death: If the borrowers get struck with serious disabilities or expire without fully repaying the student loan debt, the loan will be cancelled, instead of being passed on to the borrowers’ estate.
Student loan cancellation is not an automatic process but needs applying using government forms. For private loans, the borrowers will need to ask the creditors about their loan cancellation programs.
GallerLaw, LLC cover all areas of student loan debt. Be it discharge, forgiveness or default, or even seeking grace period, our competent and experienced attorneys will leave no stone unturned to turn things in your favor.
- Student loan discharge: Our student loan debt attorney is in the best position to discharge student loan debt by guiding and advising regarding the discharge provisions available under both the Direct Loan and FFEL programs.
- Student loan forgiveness: Enrolling in any one of the four federal government main income-driven repayment plans will make you eligible for student loan forgiveness after 20 or 25 years, depending on the plan. Our student loan debt lawyer can help you in this.
- Student loan default: The failure to make loan debt repayments when they are due is a reality that can face any student borrower. Our seasoned student loan default lawyer will not only prevent your creditors from taking legal action but will also negotiate with them to lower your financial burden.
- Student loan grace period: Since not all federal student loans have a grace period, our lawyer for student loans are experienced enough to find ways to get student loan grace period extended by a legally permissible limit of six months.
- Federal student loan attorneys: Our federal student loan attorneys are well versed with the law to help out any student borrower of federal student loan facing default.
- Private student loan attorneys: Getting any concessions on private student loans in case of a payment default is more on the whims and fancies of the creditor if this clause is not included in the student loan agreement. Our private student loan attorneys are experts in negotiations and will render all the assistance required.
Contact us now
Is your student loan debt repayment giving you sleepless nights? Contact Gallerlaw, LLC to get rid of all your worries and tensions. The experienced Georgia-based student loan attorneys have the wherewithal to handle even the most complicated cases.