Tips for paying off student loan debt in bankruptcy

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People with private student loans have struggled during the pandemic. Their loans are not eligible for the government’s penalty-free repayment break, which is in effect until at least October 1 for federal student loans.

About 70% of borrowers in a new Student Loan Hero survey were successful in getting their private lender to give them a break after calling to ask.

Almost three in ten respondents with private student loans say they have considered filing for bankruptcy in the past three months. Generation X has thought about this the most.

We spoke to Christie Arkovich, a Certified Student Debt Advisor and student loan lawyer.

“What we are targeting is someone who generally had federal loans and private loans and we generally argue that the private loans were taken out of the cost of education and therefore they are like n ‘any other debt, credit card debt and the like, and they can be demobilized,’ Arkovich said.

“Apart from the cost of education” means that more was loaned than the person needed. Arkovich says his goal with bankruptcy cases isn’t necessarily to get rid of all of the debt, but to make payments sustainable and affordable, with an end date.

Bankruptcy is an extreme measure and not for everyone.

“Bankruptcy is an option of last resort because it will really force you not only as a student loan borrower, but as a citizen and consumer to start from scratch on your finances,” Arkovich said. “So your student loan debt shouldn’t be the only reason you would consider bankruptcy. “

One thing to consider first with private student loans is debt consolidation. You can work with a nonprofit credit counselor on this. There are also private loan repayment assistance programs.

Federal student loans have more options, including student loan exemption programs.

For current students, make sure your FAFSA is up to date, so that it reflects your family’s current financial situation. After that, contact your school’s financial aid office. Explain your situation if your family has lost income due to the pandemic.

Colleges expect students to appeal for financial aid now, and it can earn you more money to help pay for your education.

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