Student Loan Debt Relief

Student loans are a nightmare that keeps many people awake at night, so much so that it has been labeled a “crisis” among our Presidential Candidates. The possible changes that could be seen in the future, doesn’t help those of us who are struggling now. For many borrowers who have defaulted on their loans, there are ways to get out of default status and programs available to make repayment more affordable. 

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We can reduce student loan debt

Our licensed attorneys will contact your student loan lenders and being negotiating them to help reduce the principal and interest you owe. As with most of our cases, the borrower will end up paying a fraction of the original balance. The rest of the student loan may be forgiven without having to file for bankruptcy. 
 

Private Student Loans

 Private loans are defined by the promissory note signed and the terms of each loan. The consequences of Private loan default are negative credit reporting, collection calls and letters, assessment of late fees and collection costs and even possible litigation in state court. Aside from being able to file for bankruptcy, private loan default is very similar to defaulting on other unsecured consumer debt. So, what options do you have if bankruptcy will not discharge the debt? One can raise disputes, defenses and counter-claims as well as negotiate settlements. Additionally, there is a Statute of Limitation period for Private Loans but “waiting it out” is a very risky option. 

Federal Student Loans

Federal loan default is defined as, “the failure of a borrower and endorses, if any, to make an installment payment when due, or to meet other terms of the promissory note, If the Secretary finds it reasonable to conclude that the borrower and endorses, if any, no longer intend to honor the obligation to repay, provided that this failure persists for 270 days”. 34 C.F.R 685.102. Federal loan consequences of default are slightly different. There is negative credit reporting, denial of new federal aid, collection fees up to 25% as well as forced administrative collections such as wage garnishment and tax refund intercepts. Yet, there are four options available for federal Loan default resolution: 

Student Loan Debt Rehabillitation

Rehabilitation is just what it sounds like, the borrower rehabilitates his/her default status by making a minimum of nine monthly payments over 10 months that are calculated based on the borrowers Adjusted Gross Income and a financial review of the individual’s income and expenses. There may also be collection costs associated with Rehabilitation but it does “delete” the default from your credit report and will end wage garnishment, if any, after 5 months. 

Student Loan Debt Consolidation

Consolidation is also a good option for borrowers in default because it reports the loans as “paid-in-full” to credit bureaus. Consolidation of the loans requires enrollment in an income-driven program and may result in a zero or low payment which can be more affordable to the borrower. 

Work with Our Dedicated and Experienced Bankruptcy Lawyers

The bankruptcy lawyers of Sadek & Cooper are dedicated to providing bankruptcy and non-bankruptcy solutions for people looking to handle their debt problems. We are proud to help hard-working people in Pennsylvania and New Jersey get out of debt and on the path to a fresh financial start. To schedule a free and confidential consultation, call us at 215-545-0008 or contact us online.

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Philadelphia, Pennsylvania 19107
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