What Are My Relief Options If Student Loan Debt Is Not Forgiven?
Debtors in South Florida and across the country with student loan debt are waiting to hear about whether they will have $10,000 or $20,000 of their student debt forgiven, depending upon whether or not their debt includes Pell grants. Anyone who has federal student debt is likely awaiting the decision on President Biden’s plan to cancel debt, which will now be heard and decided by the U.S. Supreme Court. If student loan debt is not forgiven — if the Supreme Court rules that Biden’s cancellation plan cannot move forward — what options will debtors have? You may have more options than you think, including the possibility of consumer bankruptcy. Indeed, with recently issued guidance on bankruptcy for student loans, it is possible that more debtors will seek to have their student loans discharged in bankruptcy and will be eligible to have their loans discharged.
Consider the following options that may be available to you for student loan debt relief.
Temporarily Defer Your Student Loan Payments
One option — although it is not a permanent one — is to seek a deferment or forbearance for your student loans. Currently, federal student loan payments will not resume until 60 days after the pending legal challenges are resolved, as a CNBC report explains. Yet after that date, if you do not receive forgiveness of a portion or all of your student loans, you may be able to continue deferring your payments. You may be able to defer payments due to economic hardship or unemployment. If you are not eligible for either of those options, you may be able to request a forbearance.
Change Your Repayment Plan
There are different types of income-driven repayment options for student loans, which cap payments at a percentage based on your income. Whether you are currently in an income-driven plan and want to change, or you are not yet in an income-driven repayment plan, you should find out more about your options.
Consider Filing for Personal Bankruptcy
Historically, personal bankruptcy cases have not often included the discharge of student loans. Yet that being said, it is critical to know that it may be possible to have your student loans discharged in bankruptcy. The U.S. Department of Justice (DOJ) recently issued new guidance concerning student loans discharged in consumer bankruptcy cases. While the guidance does not change the overarching “undue hardship” requirement, the guidance does provide important clarification and is likely to make it much easier for debtors to receive a discharge of their student loans if they file for bankruptcy.
Contact a West Palm Beach Bankruptcy Attorney
If you have any questions about student loan debt and seeking a bankruptcy discharge, you should get in touch with an experienced attorney who can assist you. One of the West Palm Beach bankruptcy lawyers at Kelley Kaplan & Eller can speak with you today about new guidance for student loan discharges in bankruptcy and what you can do to prepare your case. Do not hesitate to get in touch with us to learn more about your options for student debt, including Chapter 7 or Chapter 13 bankruptcy.
Sources:
cnbc.com/2022/12/12/heres-what-borrowers-can-do-if-student-loan-forgiveness-falls-though.html
justice.gov/civil/page/file/1552681/download
