Student loans are the scourge of the Millenials (Generation Y) and their parents. Costs of college have skyrocketed, increasing 25% over the past five years ending 2014 alone. It’s just not possible for firmly middle class families to pay for the higher education of their children, never mind those who are falling through the bottom of the middle class as incomes don’t recover from pre-Great Rescession levels.
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This causes the parents to cosign. What parent doesn’t wish the best for their children? But cosigning a student loan debt can devastate an acceptably comfortable retirement, while the chances of remunerative employment for the new graduate are slim.
Bankruptcy is not a way out for most student loan borrowers. One has to be unable to maintain a minimal living standard to qualify for a bankruptcy discharge if the loan is from a federal or nonprofit agency.
The Department of Education programs do not apply to private student loans. Private loans can only be discharged in bankruptcy if the borrower cannot maintain a minimal living standard (same as above) or if they are not IRS-qualified: (1) the school is not approved, (2) the program is not approved, (3) the borrower is not a taxpayer, or (4) the funds were for something other than the approved Costs of Attendance.
There are non-bankruptcy Department of Education programs for these loans. For example, the loans can be entirely discharged if the borrower is disabled, or employed by a public or nonprofit agency for ten years. There are various programs to reduce the required payments and discharge the loan after 20-25 years of payments (ten years if employed by a public or nonprofit agency, including teaching).
Non-bankruptcy alternatives for private student loans are more difficult. Successful defenses to a law suit include (1) the lender’s failure to produce the loan agreement documents or records, (2) the lender’s failure to produce a proper witness, (3) the statute of limitations, and (4) the lender’s failure to produce ownership of the loan.
And, please. Do not get me started on improper collection fees or false statements from servicers (for which money recovery is available under the Fair Debt Collection Practices Act).
Confused? Don’t worry ‑ one of the reasons you need to hire an experienced debt protection lawyer for your case is to be sure that you choose the right type course of action for your situation. All you need to do is contact me for a consultation.
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