Student loan debt is the second largest consumer debt in the United States. Over the last two decades student loan debt has overtaken car loans, home equity loans, credit cards, medical debts, and trails only mortgages as the highest consumer debt for Americans. The average college student graduates with over $30,000 in student loans and the repayment terms offered by creditors are often inflexible and burdensome.
Student loans are comprised of two categories: private and federal loans. Each lender has specific policies and repayment plans that may be used to lower your monthly payments and interest rates, negotiate different repayment terms, consolidate your loans, and, in limited cases, have your loans forgiven. Our attorneys may be able to utilize income based repayment plans, total and permanent disability discharges, and administrative discharges to reduce or eliminate your student loans.
If the student loan company is unwilling to work with our clients, the United States Bankruptcy Code provides options to force student loan lenders to eliminate student loans or prevent student lenders from collecting payments. Nine circuit courts, including the 6th Circuit, which encompasses Michigan, follow the Brunner Test. The Court in Brunner v. N.Y. State Higher Educ. Servs. Corp., 831 F.2d 395 (2d Cir., 1987) held that a debtor can discharge student loans if: (1) the student demonstrates an inability to maintain, based on current income and expenses, a “minimal” standard of living if forced to repay the loans; (2) additional circumstances exist indicating that this state of affairs is likely to persist for a significant portion of the repayment period of student loans; and, (3) the debtor has made good faith efforts to repay the loans. Despite the relatively straight forward wording of the Brunner Test, passing the test is not easy and requires the skill and guidance of an experienced bankruptcy attorney.
There are a number of options to lower your plan payments including: income based payment plans, bankruptcy, disability based payment plans, settlements, etc. Some lenders may be more helpful than others but there are ways to try and reduce your monthly payments.
Through a very specific set of facts, you may qualify for what’s called a hardship discharge where the Court determines there is no reasonably likelihood that you will ever pay your student loans and due to this, they place an unnecessary hardship on your ability to lead a normal life. Most student loans, however, are very difficult to wipe away in bankruptcy.
We need to first get you on track by establishing a reasonable installment payment plan. From there, we develop a cohesive strategy to either reduce or maintain low monthly payments that will fit your budget and help to rebuild your credit while establishing a history of paying down existing student loan obligations.CONTACT US