Finance Outkast

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Student Loan Debt? 3 Ways a Debt Lawyer Can Help

According to Forbes, the number of student loan borrowers currently stands at 44.7 million Americans and the total student loan debt is $1.56 trillion. This is more than credit card debt by $521 billion. Currently, the default rate stands at about 11.4%.

Student loans are arguably the worst type of debt due as they are annoyingly difficult to drop even in bankruptcy. Fortunately, attorneys are now looking for ways to help millions of Americans with student loans.

No one actually thought they would need a student loan lawyer when they borrowed student loans. However, if you having with your repayments you’ll need a lawyer to help you negotiate a settlement or get a better repayment plan.

What’s a Student Loan Lawyer?

A student loan lawyer has extensive knowledge and experience in dealing with student, private and federal loans. Student loan lawyers will help you understand everything there is to know about private student loans as well as federal loans. They will help you navigate the complicate the complicated federal system and get better repayment plans.

Of course, you can negotiate a settlement or better repayment terms on your own but it’s advisable that you seek professional legal help.

How Can a Student Loan Lawyer Help with Student Loans?

Each year, there are more than one million student loan defaulters. You might probably be headed for the same but do you know there is a way out? With the help of a student loan lawyer, you can figure out how to reduce your payments or consolidate your loans.

However, before you hire a student loan attorney, make sure they actually offer the services you are looking for. They are typically expensive and it’s wise to consider if they are actually worth the money.

A student loan lawyer will help in the following three ways:

1. Student Loan Debt Resettlement

Turns out, you can negotiate your student loan to a significantly lower figure. However, it’s not as easy as you think and it carries its own set of risks. Also, there are some considerations that apply before you can be granted a debt settlement.

What Is a Debt Settlement?

This is an agreement between a lender and a borrower that allows the borrower to pay less than was owed as full payment. This is different from loan forgiveness as it does not involve canceling the balance.

For you to be granted a debt settlement, you must have defaulted. The lender will thoroughly scrutinize your finances before they can accept less than the amount owed. They have to confirm that you are not in a position to continue making payments.

How Does Student Loan Debt Resettlement Work?

In general, the best time to seek debt settlement is after your loan is in default but the legal action has been pursued. For a student loan settlement, the Department of Education will offer three payment options

  • Pay your principal balance and unpaid interest. All fees and future collection surcharges are waived.
  • Pay the principal balance and half of the unpaid interest balance. The remaining 50% is waived.
  • Pay 90 percent of the principal balance

Although the loan reduction is great, you are required to settle your debt in a lump sum usually in 90 days. With the help of a lawyer, you could also negotiate a better payment plan where you pay your new balance in equal monthly installments. These installments are usually paid within a single fiscal year.

Judging by your previous defaults, you probably have trouble coming up with the required amount within the stipulated time. You will either have to borrow from friends and family or your 401 (k). Unless you can get the amount in all once, seek a better alternative.

Instances When Debt Settlement Does Not Apply

There are a few situations that make you ineligible for a student loan resettlement. Most of the situations can be avoided which is why the services of loan lawyers are highly recommended. If any of the following situations apply to you, then you are probably ineligible.

You Deliberately Defaulted Just to Get a Loan Resettlement

Strategic default is considered as a form of fraud and it could land you in even more trouble. Holding out on your payments is seen as trying to force the lender to settle. The more you continue with your strategic default, the higher your balance grows due to the accrued interest.

You Suddenly Got a Large Sum of Money

The first thought that comes to mind when you win a lottery is probably to settle your loans. If you are thinking of negotiating a settlement, it won’t work.

The lenders will typically not approve a settlement as they will argue that you have sufficient funds to continue making your monthly payments. This also applies if you get a salary increment or receive an inheritance.

2. Student Loan Forgiveness

Getting your student loan forgiven is not easily attainable but with student lawyers from, you at least stand a chance. There are three paths you can take; the first path is based on your career.

The second focuses on your repayments schedule, the number of on-time payments, etc. The third option is based on extraordinary circumstances which rarely come into play. The first two options are only applicable for federals student loans while the last option is applicable for both private and federal loans.

Types of Loan Forgiveness

Each of these categories has a set of requirements that qualify you for loan forgiveness. Note, this isn’t the complete list of types of forgiveness. Be sure to seek the services of student loan lawyers to help you navigate the hoops.

Teacher Loan Forgiveness

It was created in 1998 to increase the uptake of teaching jobs at secondary schools, elementary schools, and other educational agencies. Teachers who have taught in these schools for five consecutive years are eligible for loan forgiveness ranging from $5,000 to $17,500. Only unsubsidized and direct subsidized loans qualify for the teacher loan forgiveness program.

You can hire a lawyer to file the necessary paperwork and ensure you meet the requirements or you can do it on your own.

Loan Forgiveness for Lawyers

Lawyers are offered a financial incentive if they agree to spend a specified number of years practicing in government offices or in public service. For example, practicing under the Air Force Judge Advocate program could get your student forgiven by up to $65,000. If you work in the department of justice for at least 3 years you will get your loan reduced by up to $60,000.

3. Student Loan Discharge

Federal student debt will never go away unless it is paid off but in very rare circumstances, the government can discharge the balance of your student loan. There are at least seven ways you can pursue student loan discharge.

Some of these include:

Closed School Discharge

If your school is shut down while you are still enrolled, you qualify for a loan discharge. This is because federal student loans are tailored to benefit students who are enrolled in accredited universities and colleges. It also applies if you had withdrawn or had applied for a leave of absence.

Discharge in Bankruptcy

This type of discharge is rarely granted except for extreme hardship conditions. You have to prove to the bankruptcy court that repaying your student loan is a financial burden to you and your dependents. With the help of a student loan lawyer, you are required to prove that the financial hardship will extend for a long period of time.

Discharge for Permanent Disability

This is only applicable if you have a long-term disability that makes it impossible for you to work. You can qualify for the Total and Permanent Disability Discharge if you are a veteran with a service-related disability. You also qualify if you receive Supplementary Security Income benefits or Social Security Disability Insurance benefits.

Discharge due to death

If a borrower dies with an unpaid federal student loan, the loan will be discharged. This also applies if a parent takes out a plus loan for his/her child and either the child or the parent dies. It also applies to Federal Perkins and direct loans, however, the death certificate must be presented loan servicer for the discharge to commence.

Do You Need a Student Loan Lawyer?

Defaulting on student loans is often not pretty and could result in lenders taking legal action against you. It is wise to consult or hire a student loan lawyer to help you deal with the legal consequences of default.

You can also seek counsel when you are merely exploring your repayment options. Consulting a student loan attorney will help you plan your defense, in case you are involved in a legal tussle.

Student loan attorneys are helpful especially when applying for bankruptcy discharge. When you are applying for a repayment plan or a forgiveness program, you probably don’t need a lawyer. Most of these services are offered online but in case you need a student loan attorney, you can contact us.

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