The amount of student loan debt has now surpassed any other type of consumer debt. It continues to grow in volume because of reduced funding for education and because it’s harder to discharge student loans in bankruptcy. Until 1998 student loan debtors could discharge some loans if they were old enough. But in 1998 Congress changed the law to make it harder for student loan debtors to get relief. Restrictions on the discharge of student loans were first applied only to federal loans but in 2005 they were extended to private loans as well. This has created tremendous hardship for borrowers with ever increasing student loan debt.
Despite the increased restriction on discharging student loans in bankruptcy, it’s still possible under some circumstances. To get a discharge, student loan borrowers must prove they have an “undue hardship”. In Iowa the factors considered in determining an undue hardship are (1) the debtor’s past, current, and reasonably reliable future financial resources; (2) the debtor’s and the debtor’s dependent’s reasonably necessary living expenses; and (3) any other relevant facts and circumstances. If you think you have the right circumstances to warrant a student loan bankruptcy discharge, please contact us.
If student loans can’t be discharged in bankruptcy many other programs are available to deal with student loans, especially federal loans. For federal loans there are numerous income based repayment options available, most leading to debt forgiveness after a number of years of successful repayment. Debt collectors don’t always accurately explain these programs, though, which may lead to fair debt collection violations.
For private loans, there are no similar income based repayment options unless offered directly by the private lender. But there may be other defenses to private student loan collection like the statute of limitation or a lack of documentation. For example, collection of student loans by the National Collegiate Student Loan Trust (NCSLT) or another third party creates its own set of issues. NCSLT has been filing hundreds of lawsuits around the country after purchasing private student loans from lenders.
But the lawsuits NCSLT has been filing often fail to meet the requirements needed to justify a judgment against the borrower. For instance, the lawsuits frequently don’t include any documentation about the original contract between the borrower and lender and there’s usually no documentation showing how NCSLT obtained the loan. As a result, many of these lawsuits are being dismissed before they even reach trial. If you’ve been contacted by NCSLT about a defaulted student loan contact us immediately about what defenses might be available.
I receive literally dozens of inquiries each month from people struggling with student loan debt. I’m obviously not able to respond to these inquiries individually and have been limiting my student loan representation to people with private student loans held by one of the National Collegiate Student Loan Trusts or by other debt collectors of private student loans. These are the loans where there have been issues related to documentation and proof of ownership. As a result:
- If you have private loans with one of the National Collegiate Student Loan Trusts, please contact me. There’s a good chance collection of these loans can be stopped.
- If you have private loans and are disabled, attended an unaccredited college or trade school or cosigned for someone who was not your spouse or dependent please contact me. You may qualify for a discharge of these loans in bankruptcy.
- If you have private loans and can’t reach an affordable monthly payment plan with your lender please contact me. You may want to consider filing a Chapter 13 bankruptcy to establish a payment you can afford.
- If you have federal loans in default please go to www.studentloanborrowerassistance.org or to my website’s blog to read about income based repayment options and loan discharges. Federal student loan programs provide numerous options for curing a default and for loan repayment or discharge that you can apply for on your own. You can also get information about your federal loans by going to the National Student Loan Data System (NSLDS) website.