As you may or may not know, student loans are not usually able to be discharged during bankruptcy. If you are struggling with student loan debt, bankruptcy is likely not the right solution for you.
What can you do instead to make it easier to get control over your debts? There are actually several things to try. Here are three.
1. Forbearance and deferment
The first thing you should do is look into forbearance or deferment. If you can have the loan deferred, you won’t have to make payments. Forbearances also allow you to stop making payments for a time. The differences between them are small but important. A forbearance generally allows you to stop making payments while interest still accrues. Deferments usually stop both interest and principal balance payments. You may have to show that you are not currently in default to qualify for a deferment, while forbearances may be granted even if you have missed payments.
Another good option is to look into a consolidation loan. Depending on how many loans you pay back, a consolidation loan can group them together and reduce your monthly payment. You’ll have only one interest rate to worry about along with a single payment. This makes it easier to remember to pay your loans and to pay more on a single principal balance when you have extra money. Remember, to get a consolidation loan, you may need to have a moderate-to-high credit score or a co-signer.
3. Income-based repayment
Another good option for people struggling to make payments is an income-based repayment plan. Income-based repayment plans consider your current income along with your expenses. The amount you can pay is then calculated. It should be an amount you can afford to pay comfortably.
If none of these things will work for you, consider special ways to have your loans discharged. For example, if you have a permanent total disability or are unemployed, struggle with economic hardship, are enrolled in school, work in health care or teach a needy population, there may be special ways for you to reduce or eliminate what you owe. It’s a good idea to talk to an attorney who specializes in school loan discharges and consolidations to find out which of these may work for you.
Although student loans are difficult to discharge in bankruptcies, there are many other options. The right option for you could be any of the above, or others.