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Strategies from a bankruptcy law firm for managing student debt

In several recent posts, we’ve discussed how student debt might be dischargeable in a bankruptcy case if an undue hardship showing is met.

However, that provision is not easily met. If extenuating circumstances are not present, a new graduate may find his or her debt to be unmanageable. In fact, as we note on our website, Chapter 7 generally does not eliminate school loans, nor stop the interest from accruing. 

Nevertheless, bankruptcy laws can still help struggling graduates. Debt collectors can be extremely aggressive, and a filing may provide some breathing room. We also offer strategies to help borrowers in default on their student loans. One option might be loan cancellation pursuant to a federal program. Another option might address repayment adjustments, such as loan consolidation or a loan deferment or forbearance. 

There may also be work programs that provide some relief. In a recent regional example, local lawmakers established a loan authority that is able to provide low interest rates to residents. Typically, a local governmental entity can refinance loans by tapping into the proceeds from tax-exempt bonds, and then using that tax-free revenue to lower interest rates. The county in this particular instance passed the legislation as a way of attracting recent graduates to relocate to their area, refinance their student loans and experience a lower cost of living.

Notably, this example is not isolated: a handful of states across the country have passed laws that provide for refinancing of student loans. As a law firm that has helped many individuals struggling with debts to review their options, we are familiar with such strategies.

Source: Washington Post, “Maryland county wants to ease the burden of student debt for its residents,” Danielle Douglas-Gabriel, Dec. 13, 2015

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Goldman & Beslow, LLC is a Federal Debt Relief Agency by an Act of Congress. We have proudly assisted consumers seeking relief under the U.S. Bankruptcy Code for over 38 years.

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