You’ve heard the reports in recent years about the growing problem of student loan defaults.
It’s never been bigger than now.
According to a recent article in the Wall Street Journal, school loan repayment defaults have reached an all-time record in this country. Nearly seven million Americans have gone at least a full year without making a payment on their federal student loans. This translates into about 17 percent of all borrowers with federal student loans who are so delinquent they have been unable to pay anything in any amount on their student loans for over a year.
The reasons for this are several, but include the fact that many student loan borrowers are presently unemployed, some have low paying jobs, and of course, they have other bills to pay because life is expensive. Unfortunately, these student loans do not expire and the government can continue collecting basically for the person’s entire life. Also, the student loan creditors have the power to attach wages, seize bank accounts, and take tax refunds.
If you find yourself in this position, even if you are not a full year behind in payments, you can always consider filing a Chapter 13 Reorganization through the U.S. Bankruptcy Court. Chapter 13 will not eliminate the student loans, but will stop the student loan creditors from all collections including wage attachments, and seizures of bank account and tax refunds. Then, the monthly expenses are deducted from the monthly income and a plan is developed that is affordable on a monthly basis. At least for the next five years, the student loan creditors will be completely, totally off your back and who knows, after five years, the student loan laws or the bankruptcy laws may change, or you may be in a position where you can better afford these loans going forward. At least it will give you five years of breathing space in which all of the student loan creditors including state loans, federal loans, and private loans will be off your back.
If you find yourself in this position, or if you have questions and wish to discuss your individual situation further, give Steidl and Steinberg a call at 412-391-8000. I am sure that we can offer you some help regarding student loans.