I just watched yet another attorney’s video from 2013 about how student loans are hardly ever discharged in a bankruptcy unless you are extremely ill. The ending quote about student loans was “you’re stuck with them”.
And that was it. No discussion about options, possible outcomes, etc. Just you’re stuck with them. Unfortunately that is still the outlook of most attorneys. I guess that’s good news for my student loan practice, but we can only serve so many clients. What about all the ones we don’t reach?
We don’t accept that. At our law firm we are finding solutions. This week one of our private student loan clients accepted a settlement that was only 8% of his nearly 100k balance. 8 percent. Really. And he’s young, perfectly healthy, with no disability. He is borrowing $8,000 from his father to pay off in full this ridiculously huge student loan that he could never make a dent in otherwise. Then we are putting him into an income driven plan with debt forgiveness for his much smaller federal loans. I think his payment will be around $250. He came to me with $140,000 in debt with an income of less than $35,000. His student loan statement from Navient showed he was $69k past due. Most attorneys including the one from the video I watched today would say tough luck, you’re stuck with them. Needless to say it was quite depressing watching this video. I’m glad this client didn’t see that video, he probably would never have picked up the phone to call me. Instead he now owes around 40k instead of $140k and he has a reasonable payment of $250 with debt forgiveness for anything not paid after 25 years. And he feels good about himself and where his life is headed now.
What about discharging your student loans in bankruptcy? Well it’s true, this is very difficult if you are looking for a total win – a full discharge. But remember we are looking for solutions. Affordable and reasonable payments with an end in sight. In most instances we can settle these claims in bankruptcy for far less than what is owed, over time and without further interest. The settlement is tax free when it is done in bankruptcy. A judge may also grant a partial discharge. Or perhaps you received no educational benefit from the crappy for-profit, non-accredited school you attended and the loan can be excluded from the non-dischargeable language normally seen. Solutions. Every one of these options is far better than you’re just stuck with them.
To see what we can suggest as options for you, please contact us at Christie D. Arkovich, P.A. or visit our Student Loan Survival Center webpage. Check out our prior entries on this blog – a day in the life of a student loan lawyer for ideas.