As the student loan debt industry nears $1 trillion, many graduates have already experienced financial hardship over maintaining their payments and many more will soon join suit. Unfortunately, finding help with student loan debts is becoming more of a problem in recent years. However, that isn’t to say that you have to continue to suffer under a mounting debt burden.
The first potential source for help is through your lender directly. Many student loan lenders are willing to provide temporary suspensions in payments, lower interest rates or longer repayment terms that can reduce the monthly payment requirement. The tricky part is having a legitimate reason for needing these modified payment terms. In many cases, a lender will need proof of your financial hardship such as lack of employment, inadequate salary or additional debt brought about by a medical condition.
Although negotiating with lenders directly can help you resolve your financial hardship over debt payments, there are still instances in which your lender cannot provide the full range of relief that you need. You may have heard that filing for bankruptcy is not an option for student loan debt relief. This is true to an extent; however, there are still ways to have some of your financial troubles relieved in a Chapter 13 filing.
When you file for Chapter 13 bankruptcy all of your debts will be listed on your petition, including student loan debts. Typically, these debts are not eligible for a debt discharge, but can become part of your repayment plan if you can demonstrate these payments create undue financial hardship. That is to say that your financial situation is such that the bulk of your debt liability is held under a student loan and that your income is insufficient to support these payments. Note that federal student loans are not eligible and only a privately held loan may be considered in these circumstances. Further, if your debt is approved you will be required to repay them as part of your extended payment plan as a priority debt. In other words, these debts will be repaid before any other type of debt like a credit card, utility or medical bill.