I find it amazing how the higher educated institutions have managed to hoodwink both the Federal government as well as the rest of Americans with Student Loans. The American Dream should include a good education not only K-12 but also a higher education. The core concept of Student Loan program is good and of sound principles but like anything good greed and people’s personal agendas have destroyed its core concept for the advancement of a few. Meanwhile, the masses are left dealing with the result of the greed.
American Universities and Colleges are supposedly the best in the world. I would hope that they are the best at something with all the money that they manage to ascertain yearly from Americans each year trying to better their circumstances. One thing is for certain, Universities and Colleges are the best at legalize robbery. They sell the hopeful on a good education from their institution will get you a job that will make you more if you did not come to their institution. As a result, millions of Americans each year take Student Loans out from the Federal government on a representation that cannot quite be back up by Universities and Colleges. In fact, these institutions can only promise one thing—if you need to take student loans out you can come to our institution and we will take your money.
I could go on and on about the wrongs of these legalize robbery that appears to be absolutely found with our government. The issues Student Loans cause are that the payments being due and people simply not being able to pay back even the minimal monthly amount. In my office, I have seen an increase of clients between the ages of 25-30 years old that are facing delinquencies with their Student Loans. They come and see me because they have hit an age that they realize that they must do something to fix the problem and also because they want to have a family, home and the American dream. As any of us in our youth, we ignore the situation and until we really need to do something about it.
Let us define delinquent Student Loans. Delinquent Student Loans are loans that are not in deferment or forbearance, but are loans that the student is not paying whether because they cannot afford them or simply are not paying. I will tell you that the most common scenarios is that it took my clients nearly 5-10 years to actually get a good enough or steady enough job to afford to make payments on student loans and still be able to live and eat. So the point is that because they could not make payments, Student Loan companies accelerated the loan and are now expecting the entire amount to be paid. There might be a judgment issued against the student and a garnishment order issued by the court and the student finally getting on track with a job is facing total disaster because the wage garnishment will eliminate their ability to financially survive.
So what are your options when you are delinquent? There are three solid choices to consider:
1. Workout payment arrangements: If you are delinquent and the student loan provider has either filed a complaint or is threating to file a complaint against you for past due payments, you can reach out to the lawyer representing the student loan provider or you can contact the provider directly to try and work out a payment with your provider. At this point, you still have an opportunity to try and get back on track with a payment arrangement. The only problem with this option is that your student loan provider/attorney must want to agree to an arrangement. The law is clear that once they accelerate the loan due to the student’s failure to make payments, the student loan provider can take actions against the student.
2. Fight the Complaint in Court: If you are delinquent and a complaint is filed as a result of your delinquency, you do have the right to fight the complaint. You will need to file an answer and go to court or you can hire an attorney to help you fight the complaint. The only problem with this option is that you will need a little help from the court to either help prevent the student loan provider from accelerating the loan or to work out a payment arrangements. Additionally, I want to be very clear here—if you signed up for the student loans and took courses and you know it—you are not getting rid of your student loans in one of these cases. The best case scenario in this situation is to prevent the acceleration of the loan and workout a payment arrangement that you can afford.
3. File a Chapter 13 Bankruptcy Case: A Chapter 13 Bankruptcy case is not just for people who fallen behind on their mortgages or car payments. It is a reorganization case for consumers to reorganize their financial circumstances including dealing with delinquent student loans. Now, I think most people know that student loans are non-dischargeable unsecured debt i.e. you can not get rid of it! However, the Chapter 13 Bankruptcy case gives you an option that can allow you to get a grip of the delinquent loans and the interest rates that are charged by student loan providers that can nearly doubt your loans owed.
How does it work? In a Chapter 13 case, the interest being charged by your student loan provider is stayed which means there is no interest charged. So, the amount that you enter into your bankruptcy case with remains the same amount throughout your case. Once you establish the amount of your student loans, you can set forth a plan payment amount in your Chapter 13 that you can afford. In other words, you are forcing the student loan provider to take a monthly payment from you even if they denied you before and demanded the full amount to be paid. You are taking control of the situation. Finally, only the student loan amount is non-dischargeable not the attorney’s fees or cost. Therefore, you can file an objection to those fees and cost being tack on to your student loan amount as being non-dischargeable.
Generally, my clients that have finally gotten that job that is consistent and yield enough to make a plan payment each month after expenses have chosen the Chapter 13 route. Often the clients find themselves at the end of their Chapter 13 plan completed paid in full and completely relieved of the ongoing curse known as student loans. Additionally, the Chapter 13 case, unlike the first two choices, cleans up the student’s credit report. Student loans will destroy a student’s credit irrespective of how current the student is on all of the other debts that they owe on.
Irrespective of the choice that is made on how to approach student loan issues, the result is that students must pay for student loans. So, if you are one these students that are being threaten by past due student loans, you need to do something and these three options should be seriously considered.