While bankruptcy can provide relief for debt in general, it may not necessarily discharge student loan debt. Arizona bankruptcy lawyers are trained in the new bankruptcy reforms as they affect student debt and can advise you on alternatives.
Student loans are one of the debts that are not generally discharged by Chapter 7 or Chapter 13 bankruptcy except under specific conditions. Not many folks graduate from college of technical schools these days with the aid of some type of student loans. Most of these loans are federally funded and as the rate of default has increased (as the need for student loans also increased), the government has put tighter restrictions on defaults. A deferment, or an official delaying of the repayment of the debt, is available to some who meet specific criteria, such as military service, a return to school or other extenuating circumstance. Arizona bankruptcy lawyers suggest the options below, even if you decide to declare bankruptcy:
Forbearance is when your lender gives you permission to stop making payments on your loan for a specific period of time, usually to a maximum of one year. Unlike deferments, interest does continue to accumulate, increasing your debt. However, forbearances are easier to obtain than deferments because they are not subject to so many conditions and are not tied to the type of loan and when they were obtained. Forbearances may be granted on federal loans for reasons such as illness, financial difficulties, inability to pay within the maximum time allotted for the loan and if the collective payments total more than 20% of the borrower's income. Unlike deferments, forbearances may be granted even if you are in default of the loan. Forms to request a forbearance are available by contacting your lender.
Cancellation of a student loan is dependent on specific conditions, much like a deferment. Just like it sounds, cancellation of the loan means you no longer have to pay all or part of the balance. Some conditions under which all or part of the loan may be cancelled include:
Death - if you die, your executor or estate will not have to pay off the balance of your federal loan.
Permanent, total disability - if you become permanently disabled and cannot work or are disabled to the point that the disability will result in your death, you can cancel you student loan. You must have become disabled prior to receiving the loan, though. You will need a form from your lender and filled out by your attending physician to qualify for this cancellation.
Member of a uniformed service - certain members of a uniformed service, such as the Army or National Atmospheric and Oceanic Corps, are eligible for the cancellation of their student loans. More information on this option is available from your commanding officer.
Teaching in needy areas - Former students who go on to teach in disadvantaged areas are eligible to cancel their student loans.
Providing other assistance in needy areas - providing services other than teaching to disadvantaged groups or populations also qualifies former students to cancel their student loans.
Health care professionals - Some students of the health care industry are eligible to cancel their student loans.
Law Enforcement - Some full time law enforcement professionals can cancel all or part of their remaining older Perkins Loans.
Defunct trade schools - Some students who enrolled in trade schools and obtained financial assistance to do so may cancel these student loans if the school closed before the curriculum was finished. In the past, some students were also falsely certified for these loans. If you are one of these unfortunate people, you can cancel 100% of your student loan.
Identity theft - If someone forged your name and signature to obtain a student loan, you are not responsible for that loan and you may cancel 100% of it.
Withdrawal from school - If you withdrew from school or enrolled and never attended and did not receive a refund for your tuition paid, you may cancel that student loan if you failed to complete 60% of the curriculum.
The Department of Education retains as Ombudsman that may be able to provide your further assistance of help you with the two options above, in addition to Arizona bankruptcy lawyers.
When faced with the possibility of bankruptcy, Arizona Bankruptcy Lawyers can help get your financial situation back under control.