Pay Off Student Loan Debt: Re-Evaluating Your Payment Options

Do federal student loans have you feeling stuck? It’s not uncommon to feel overwhelmed by student loan debt. But there is hope! We will explore your student loan repayment options and discuss how they may help break the cycle of student loan payments.

We will cover forbearance, deferment, income-driven repayment plans, and more!

Paying off your student loans shouldn’t put you in financial distress.

Life seldom proceeds as planned. When you first applied for financial assistance or accepted the conditions of a student loan, you may have predicted what your financial status would be like after graduation. And for many graduates… things have changed considerably.

The good news is that there are nine different federal student loan repayment plans available for students who want to modify their student loan debt and recalculate it.

Our team has over 100 years of combined legal experience assisting Arkansans to navigate life’s most difficult financial circumstances, allowing us to analyze your financial profile and determine your eligibility for particular benefits.

Student Loans and Bankruptcy

It’s one of the most commonly asked student loan repayment questions: Can you discharge your student loans in bankruptcy? The short answer: normally no, student loans borrowers are not able to generally get their loans discharged. Student loans are now the second-highest consumer debt category – behind mortgages, but ahead of credit card debt. Unlike other consumer debt such as credit card and mortgage debt, however, student loans traditionally cannot be discharged in bankruptcy.

 Why are student loans different?

The rationale for the student loan “no bankruptcy” exception likely grew from a concern that student loan borrowers could take advantage of bankruptcy laws, borrow a bunch of debt, earn a degree and then file for bankruptcy.

In some circumstances, student loans can be discharged, but you have to file a separate lawsuit, called an adversary proceeding. This lawsuit must be filed with the bankruptcy court. To be successful at discharging your student loans, you must prove to a judge that being forced to repay your student loans poses what the U.S. Bankruptcy Code calls an “undue hardship.”

So, it is possible to get your student loans discharged.

The courts of the Eighth Circuit (the circuit Arkansas is in), look at the debtor’s individual circumstances (they call it a totality of the circumstances test) to determine whether excluding student loans from discharge would impose an undue hardship on the debtor.

The test includes: “(1) the debtor’s past, present, and reasonably reliable future financial resources; (2) the debtor’s reasonable and necessary living expenses; and (3) any other relevant facts and circumstances.”

 How do I deal with my federal student loans?

When dealing with student loans and bankruptcy there are a couple of things to think about. In Chapter 7, they will not likely get discharged and dealing with your student loans will remain the same. In Chapter 13, you may be able to file and make the majority of your payment go to student loans while your other creditors (maybe credit card and medical bills, do not get paid as much). Also, you may file be able to file Chapter 13 and pay your other creditors (house and car) and push your student loans for another 5 years.

How to deal with Student Loans outside of bankruptcy?

Your best option is probably one of the following income-based repayment options:

  1. Revised Pay As You Earn Repayment Plan (REPAYE Plan)
  2. Pay As You Earn Repayment Plan (PAYE Plan)
  3. Income-Based Repayment Plan (IBR Plan)
  4. Income-Contingent Repayment Plan (ICR Plan)

Sometimes you can get a payment of $0.00 per month in an income-based repayment program.

Free Student Loan Consultation

The Student Loan Management Process

Ongoing Requirements

Every year, federal assistance programs demand that you “recertify” your income. You will be asked to complete a recertification form that we can assist with over the phone, via video chat, or in person.

Student Loan Management Programs

Our firm can determine your eligibility for each of the nine federally approved student loan repayment programs after a thorough examination of your student loan records, financial status, and earnings. Each plan has its own set of rules regarding debt forgiveness, consolidation, or restructuring.

The analysis will provide our experienced staff with the information necessary to advise you on the best actions to take to make sure you maintain a healthy financial profile and your student loans are not such a burden.

Student Loan Repayment Options

Everyone looks at the remaining balance of their federal student loans and is worried about how they are going to make monthly payments on the federal loans until the remaining loan balance is paid off. That repayment period can look daunting for student loan borrowers.

With the analysis, we can do looking at your annual income, monthly payments, the federal loans you have, the federal repayment plans, and if your loans are eligible for any federal student loan repayment programs. There are many different loan repayment options with different names (public service loan forgiveness, income-contingent repayment plan, income-driven repayment plan, extended repayment plan, income-based repayment plan, graduated repayment plan, income-sensitive repayment plan, pay as you earn, etc.)

Figuring out what student loan repayment plan you need or possibly loan forgiveness is difficult. The repayment options that are available typically fall into four categories:

Affordable Monthly Payments

Lower monthly payment amounts based on how much money you make rather than how much you owe, ensuring that your payment is always reasonable. You may have heard of options like income-driven repayment plan, income-contingent repayment plan, income-based repayment plan, extended repayment plan, or pay as you earn plan. These are typically based on you income and family size.

Loan Forgiveness

Determine if you’re eligible to have the federal government forgive part or all of your student loans.

Default Resolution

Combine your defaulted student loans into a new federal student loan and cure any outstanding defaults.

Consolidate Your Payment

All of your federal student loans may be consolidated into a single loan with one easy monthly payment to a single loan servicer. You may have heard of a direct consolidation loan,

Getting Started

The first and most essential step is to get an evaluation of your student loan debt from one of our knowledgeable attorneys. You will be advised on your alternatives depending on the qualification standards required by the Federal Government and Department of Education after the analysis is complete.

What happens if I don’t want to move forward?

There is no obligation to use our firm after the first evaluation. If you want a copy of your analysis and our contact information, please let us know. We can help you now or later if you decide to wait.

Take the First Step

Choose to handle your student debt responsibly. You don’t have to give up the quality of life or peace of mind, especially because there may be alternative choices available to you. Call our office at 501.891.6000 for a free no-risk consultation with one of our knowledgeable staff today.

wh Law, is a debt relief agency. We help people file for bankruptcy protection under the U.S Bankruptcy Code.

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