There are many myths and misunderstandings surrounding student loans. Below are a few facts that you should be aware of because they could impact your finances.
Fact #1: Bankruptcy can help with student loans
Many news reports will lead you to believe that filing for bankruptcy will not provide financial relief from your student loans. While it is true that discharging or eliminating your student loans is difficult, it is not impossible. You must be able to establish “undue hardship,” which likely means loss of employment, medical hardship or other severe financial crisis. It is also important to understand that filing a Chapter 13 may provide some relief by making your monthly student loan payments more manageable.
Fact #2: Student loan forgiveness helps borrowers with large loans
If you owe a large amount on your student loan (sums exceeding $100,000), loan forgiveness can be extremely beneficial. This is especially true if you also have a low salary (or even high salary with extremely large amounts of debt, such as a physician might have). Why is this? Student loan forgiveness occurs after 20 years of making payments. Those with average amounts of student loan debt and average incomes are less likely to have very much debt left to forgiven after 20 years.
Fact #3: You should run the numbers on income-based repayment plans
As discussed above, whether or not an income-based repayment plan would benefit you depends on your income and student loan balance. An income-based repayment plan permits you to reduce your monthly student loan payment, which is advantageous for borrowers who cannot afford to make their full student loan payments. However, you should run the numbers and make sure you understand how much you will be paying toward interest.
Before you make any decisions regarding your student loans, contact us for the advice and guidance you need. We will help you understand all of your available options and which is most advantageous to you.
For your student loan, bankruptcy, foreclosure, and debtor’s rights matters, contact DeLadurantey Law Office, LLC at (414) 377-0518. We serve the counties of Milwaukee, Waukesha, Kenosha, and Racine, including such areas as Milwaukee, Merton, Delafield City, Waukesha City, and Kenosha. Visit our web site and like us on Facebook.