You’ve finally realized that you’re running out of options to deal with your student loans. One more day passes, adding one more day of stress. You’re living hand to mouth and cannot keep up. Each new day looks worse than the day before.
Let’s look at how to get relief from the different types of student loans.
There are federal loans.
They don’t go away in bankruptcy for the most part. (Either you’re disabled or retired, generally speaking.) They have no statute of limitations. But the federal government, under Obama’s leadership, has finally become responsive to the needs of the borrowers. There are now about a half dozen income driven repayment plans. Each has its own special characteristics but they share the common goal of ending the loans at the end of the road.
There are nonprofit student loans.
They also don’t go away in bankruptcy for the most part. But statutes of limitations (and other state law defenses) apply. Which state’s law applies is complicated. (Sorry.) The decision to intentionally default and wait to see if you’ll be sued is a difficult one. If you get sued, your defenses are (1) the lender cannot prove the debt – documents or records are missing, (2) the loan was transferred but the transfer cannot be proven, or (3) the statute of limitations has passed.
There are private student loans that are IRS-qualified.
They are like nonprofit student loans. They also don’t go away in bankruptcy for the most part. But statutes of limitations also apply to them. IRS qualification requires (1) a taxpaying borrower, (2) a qualified school, (3) a qualified program, and (4) at least half-time attendance.
Finally there are regular private student loans.
They are not from the government. They are not from a nonprofit. They are not IRS-qualified. These loans will go away with a bankruptcy filing. Or you could intentionally stop paying and wait to be sued. Your defenses are (1) the lender cannot prove the debt – documents or records are missing, (2) the loan was transferred but the transfer cannot be proven, or (3) the statute of limitations has passed.
Let’s get you back on your feet, shall we?