What If I Can¿t Make Payments on My Student Loans?
There are options available to you if you cannot make payments on your student loans. The best approach is to acknowledge the situation as a problem, and then take steps to help yourself and your financial condition. This will help you avoid defaulting on the loans, which will significantly damage your credit and increase the amount you owe. If you are having trouble making payments, options include: - Loan cancellation
- Postponing payments through forbearance or deferment
- Filing bankruptcy and discharging the loans
What Is a Forbearance?
A forbearance is a postponement of payments whereby the loan holder (the bank or agency that granted you the original loan) allows you to stop making payments for a certain period of time. Forbearances apply only to the principal sum owed, so interest will continue to accrue. Forbearances are easer to get than deferments, but are less attractive since your total balance due will increase during a forbearance because of accruing interest. What Is Deferment?
Deferment is a postponement of loan payments based on a certain condition being met for a certain amount of time. For example, you may be able to get a deferment for being unemployed or for going back to school. The length of extra time a deferment gives you varies depending on the loan, and sometimes deferments postpone payments of both the principal due and the interest. It is never possible to receive a deferment if you have defaulted on the loan. How Do I Discharge Loans through Bankruptcy?
A law was passed in 1998 that has made it even more difficult to discharge a student loan in bankruptcy. It is incredibly difficult to discharge a loan in this way, and the only approach is to convince a court that repaying the loan would create a severe hardship for you. How Do I Cancel Loans?
You may be able to cancel all or part of your loan by: - Teaching needy people (including disabled and low income populations)
- Joining the military or other uniformed service
- Performing community service
Do I Need a Lawyer?
If you are considering filing for bankruptcy, you should speak with a bankruptcy attorney to discuss your options and rights. |
