With over 21 years of experience as a consumer bankruptcy attorney, D.J. Rausa stays on the cutting edge of Bankruptcy and Student Loan Law which enables him to provide vital information to his clients.
When one's student loan debt isn't managable and exedes one's income, it may cause the loan barrower to abandon the prospects of a career in a low-paying profession. For instance, a public defender or prosecutor can have more than $100k in law school debt, but a greatly lower beginning salary, yielding a debt-to-income ratio of 2:1 or more.
Loan forgiveness that requires the borrower to work in a particular occupation is tax-free under the current federal laws. Other types of debt forgiveness are treated as your income to the borrower, leading to what may be considered as a tax liability.
The Federal Perkins Loan Program provides students with low interest loans to help low income students to finance the costs of higher education. Students who attend any of the approximately 1,700 participating postsecondary schools may obtain Perkins loans from the institution.
The school's Perkins loan fund is maintained by ongoing functions, such as a collection by the institution on the outstanding Perkins loans performed by the school and multiple reimbursements from the department for the cost of certain statutory loan cancellation provisions.
There are 2 main types of bankruptcy for consumers:
Chapter 7 bankruptcy allows someone to eliminate the most unsecured debts in a matter of just a few months in return for giving up all of their "non-exempt" property.
Most people in debt who file for Chapter 7 may not be available to pay off unsecured debt creditors.
This is known as "no asset" bankruptcy, and most Chapter 7 bankruptcy are of this type.
Chapter 13 bankruptcy takes about 3 to 5 years. Rather than giving up property that you own, you may choose to repay a portion of your debts and live within a budget that is kept monitored closely by a bankruptcy court trustee. If you don't think you can manage required monthly payments, your Chapter 13 bankruptcy fails and your debt will remain (unless you convert to a Chapter 7 bankruptcy).
This may depend on the type of Debt Consolidation Program you want to use. It is likely that any Debt Consolidation Program you will choose can save you a large amount of money when compared to the very minimum payments. You may use a debt calculator to look at your specific situation and how much you can save.
If you are still making the minimum monthly payments on your credit card debt, the chances are high that you're mostly paying just the interest, and not paying down the actual principal amount by much if at all. This won't make much of a dent in your ovarall debt. And if you miss your payments or exceed your limit, your credit card interest rate will only go up. Replace your credit card debt with consolidation loan, where your interest rate won't change and your principal loan amount gets paid down as you make fixed monthly payments.
The common misperception that once a student takes out a student loan, they are obligated to pay it all back no matter what the circumstances are. This is not completely true. While a lot student loan debt may not be forgiven through bankruptcy, The Law Offices of D.J. Rausa may have many ideas to help you reduce or get rid of your debt.
However, it is still important to note that the process of relieving student loan debt is different from the process of discharging other types of debt and will require a very detailed analysis of the many types of student loans as well as an examination of the history of the loans.
Bankruptcy is a federal legal status of a person in debt or other entity that is not able to repay the debts it owes to their creditors. In many jurisdictions, bankruptcy is imposed by an order of the court, often initiated by the debtor.
Bankruptcy, however, is not the only legal status that a person in debt or other entity may have, and when we say bankruptcy, it isn't synonym for insolvency. In the United States, bankruptcy is applied more broadly to formal insolvency proceedings.
Student Loan Consolidation can be the right option if you:
Have loans with multiple lenders
Have a lot of student loan debt
Posess more than one type of federal loan
You have loans with variable interest rates
You have trouble paying the amount due on loans and need to organize a lower payment
Realize there are many advantages and disadvantages to a student loan consolidation.
One servicer, one bill, one payment
Lower monthly payments
Fixed interest rate
More monthly payments
More interest to pay
Loss of loan incentives
Federal student loans are loans that must be repaid, plus an agreed upon interest rate. New federal student loans are run through the Federal Direct Loan Program (FDLP). An FDLP student loan is originally borrowed from or currently owned by the Department of Education. Any federal student loan borrowed after June 2010 are FDLP loans, though the barrower of the student loan could receive FDLP loans before that time.