Student Loan Debt Solutions
Student Loan Summary:
Introduction:
Benjamin Franklin once stated, “in this world nothing can be said to be certain, except death and taxes.” Popular opinion has recentlyamended this phrase to include student loans. Most careers now require a bachelor’s degree; and consequently, the total student loan debt for Americans has ballooned to over $1.64 Trillion for federal loans and $124.65 billion for private loans.The average American with student loans has on average $35,397 of student loan debt. So, if you have student loans you are not the only one and at least you are reading this summary and progressively pursuing ways in which to mitigate your student loan debt obligation.
There are two types of student loans, federal and private student loans. Federal student loans are loans that are federally backed and have strict federally oversight. Private student loans are where private lenders lend funds to students for the excess of their educational and living expenses which federal loans do not cover.
Typically, federal loans are easier to seek an affordable payment plan because of the federal oversight. Private loans on the other hand, are more restrictive and affordable payment plans are harder to obtain for long term relief. Please read the rest of our Student Loans Summary for more information regarding the different ways which we will help you with your student loans.
Federal Student Loans:
Our office can negotiate with your lenders on your behalf and seek an amicable resolution for your student loans. Negotiating an affordable payment to manage your student loan debt is a difficult and length process but our office has the experience required to obtain the payment options you want.
Federal Student Loan Coronavirus Update: As of right now Federal Loans have been deferred with no payment due until after 09/30/20. If you current in a repayment plan, you may not have to pay but you should confirm this with your lender prior to choosing not to remit your student loan payments.
FederalStudent Loan Options: We have and will continue to take students in default through modifying, rehabilitating, or consolidatingfederal student loans.
- Modifying your current student loans is a time-consuming process but once completed will typically reduce your monthly payment by extending the current life of your loan
- The rehabilitation process is for the student who has already defaulted on a repayment plan of their student loan. Typically, rehabilitation takes about nine months to bring your loan current and then our office will further seek to negotiate with your lender to facilitate a repayment plan that works for you.
- Consolidation typically also reduces your payment and makes managing your loan easier because now you only have one monthly payment due. If you have already entered a repayment plan and defaulted for a second time, your only option would be to consolidate your loans which groups your loans into one loan, at one interest rate with one monthly payment required.
Income Based Repayment Plan: Our office can facilitate a repayment plan with your lender based on solely your income or based on both your income and expenses to make an affordable monthly payment for you. If this is your first time applying for a better student loan repayment plan and have not defaulted on a previous repayment plan, then we can seek to have you enter an Income Based Repayment Plan.
An Income Based Repayment Plan (IBR), allows for borrower’s payments to fluctuate based on what their annual gross income was last year. If you make more, you pay more however, if you make less than you also pay less. This is a great affordable option when dealing with federal student loans, because after 240 payments or remitting payments for 20 years, the unpaid loan balance is forgiven and is no longer is owed. If you show no income you may be eligible to pay only a nominal amount every month toward your federal student loans. Our office enters students into IBR and also maintains these repayment plans for a recurring legal fee, because if you ever default the advantages of this financially astute option will be lost forever.
Private Student Loans:
Our office can negotiate with your lenders on your behalf to reach a resolution where you are able to make an affordable payment each month.
COVID-19 Update: As of right now Private Loans have not been deferred and payments are still due, but you may seek a deferment on a case by case basis. This wouldbe based on your circumstances and if COVID-19 has effected your ability to make your required payments.
Summary of Private Student Loan Options: Our office has experience in facilitating loan modifications and consolidation to take your private student loans out of default. Our office’s goal is to make your loans current with an affordable payment for you.
We will attempt to lower your monthly payment using various methods of modifying your loan to allow an affordable payment. Modifying the terms that are modifiable by your private investors may be limited due to their restrictions. However, our office will explain your financial constraints, circumstantial hardship and use every method of modifying available to enable you to receive a more affordable monthly payment. Finally, barring in mind the credit requirements our office can seek to refinance your student loan on your behalf, see the Refinancing Section for information.
Refinancing Student Loans:
Our office can facilitate modifying your private/federal student loans to more favorable terms for you. Whether you want lower interest rates, longer terms with lower monthly payments or a shorter term to pay less interest over the life of the loan; our office can seek to refinance your loan on your behalf.
Positives to Refinancing:
- Saving Money: By lowing your interest rate which may lower your monthly payments and the amount repaid overall.
- Changing the Repayment Terms: You can basically modify/consolidate your student loan or loans into one loan with an affordable monthly payment in mind. Could also reduce the term to pay less interest over time if interested.
- Choose your Lender: Unhappy with your current lender, this is a process which allows you to choose your lender.
- No Down Payment Necessary: No down payment is required but a down payment may help in the process of getting approved for refinancing if credit is an issue.
- Consolidation: Are you tired of paying multiple payments at different rates? Through refinancing we can consolidate all your student loans under one
Negatives to Refinancing:
- You will require a credit score of at least 650 to be approved for refinancing, in some instances you may require a co-signer.
- Your current lender must approve of releasing your loan to the new lender who is refinancing your loan.
Student Loans Bankruptcy Options:
Federal and Private Student Loans to the dismay of popular opinion can be negotiated and can be partially discharged through Bankruptcy. You must qualify for an undue hardship discharge, which requires proving the following:
1. If forced to repay your student loans, you will not be able to afford your necessities and maintain a minimal standard of living.
2. The circumstance causing your hardship has or is likely to occur during a significant part of the life of your loan.
3. You have made good faith attempts to repay your loan.
In a Chapter 7 Bankruptcy, our office can argue these mitigating and required circumstances to state that you are unable to afford your student loans and that in part, or all of these loans should be discharged through Bankruptcy.
In a Chapter 13 Bankruptcy, our office will set up a plan to pay your debts and reduce your payments for 5 years while on the plan. These payments will likely increase once a plan is completed but you may reapply for a Chapter 13 plan multiple times within the life of your student loans.
Effective 01/27/2020 in the Southern District of New York, before litigating student loans through a bankruptcy, borrowers must enter Student Loan Mediation with their lenders. Whereby borrowers and lenders must seek and discuss consensual repayment options prior to students litigating their student loans. Although this is not currently present in the Eastern District of New York, this new procedure for student loans in the Southern District may eventually have a positive effect on the way student loans are handled throughout the rest of New York and the New York Court of Appeals.
Promising Student Loan Litigation:
In Re Rosenberg, 610 B.R. 454 (2020) Summary: In RE: Kevin Jared Rosenberg, Plaintiff v. N.Y. State Higher Education Services Corp., et. Al, Defendants, 610 B.R. 454. In Rosenberg, the plaintiff who was an attorney that represented himself in bringing an adversary proceeding stating that he was entitled “undue hardship” and to discharge his $221,385.49 consolidated student loan debt. The court applied the Brunner “undue hardship” Test and discharged all of his student loans.
The first prong of the Brunner Test, “if forced to repay your student loans, you will not be able to afford your basic necessities and maintain a minimal standard of living”, the court found that the Plaintiff met this requirement. The court examined the Plaintiff’s monthly income and expenses. The plaintiff showed how his monthly income was -$1,548.74 and the court decided that with this lack of monthly income he could not repay the student loan and maintain a “minimal” standard of living.
The second prong of the Brunner Test, “the circumstance causing your hardship is likely to occur during a significant part of the life of your loan”. The court only accounted for, whether the Plaintiff’s situation was likely to persist “for a significant portion of the repayment period of the student loans.” Summarily the court found that the Plaintiff was in default, the repayment has ended, and the loan was accelerated. The whole loan become due and the Plaintiff’s circumstances would likely exist for the remainder of the loan.
The third prong of the Brunner Test, “the debtor made good faith efforts to repay the loans”. Here, the court found that the Plaintiff made good faith efforts to make payments. Plaintiff only missed 16 payments in close to 13 years since the loan’sorigination date. Plaintiff was active in a income based repayment plan for over one year and the loan payment history stated the same. The Plaintiff actively requested forbearance on five separate occasions and did not just sit on his obligation to repay this loan. The court eventually found that the Plaintiff met this requirement met for the Undue Burden test.
The court conclusively held that the plaintiff satisfied the Brunner Test, that the student loan imposed an undue hardship on the Plaintiff and were subsequently discharged through granting a motion of summary judgement made by the Plaintiff.
This opinion is the most current case regarding student loans being discharged through an adversary proceeding. This decision will likely be aggressively contested and appealed by the Defendant. Once appeal the appellate court likely decide if the district court of the second circuit abused their discretion in granting the motion of summary judgement as a matter of law. The real question moving forward would be if there is a genuine issue of material fact that can be disputed. Overall, the case is the shinning ray of hope in the current student loan world filled with despair and financial distress.
