The summer months are shaping up to be tough times for recent college graduates. This newest round of job seekers continues to face record unemployment and mounting consumer debt. So what happens when these poor economic conditions coincide with mandatory payback timelines for astronomic educational loans? One word: defaults. In fact, many recent grads will soon exceed the 270-day window for beginning paying back their student loan, triggering a default on their mounting student loans—loans that often have high interest rates.
So what can you do if you can’t pay your student loans or have already defaulted?
Categorize Your Loan: Private or Federal
In these default scenarios, the type of student loan can make all the difference. Determine whether your student loan is federal or private. Federal student loans often offer more flexible repayment programs, economic deferments, or temporary forbearances. Alternatively, private student loans can afford less flexibility and fewer repayment options; yet in some cases have ready lenders willing to negotiate repayment with an economy-weary public.
Seek Unemployment Deferments
If you are unemployed and hold a federal student loan, you can qualify for an economic deferment or forbearance. These deferments can provide recent college graduates with precious time to get on their feet, search for steady employment, and pad their coffers for a more fruitful financial future. For those with private student loans, unemployment status can be a negotiating tool to temporarily lower loan repayment payments and possibly negotiate a deferment of the loan similar to that of federal programs.
Income Contingency Plans or Payment Reductions
What if you do have a job, but your paycheck can’t support your student loan payment? If the money you’re making can’t float the money you owe, federal student loans offer income contingent repayment plans that can more appropriately pair pay to loan payments, giving you a bit of breathing room to work your way up. While most private lenders don’t offer income contingent repayment plans, its in your best interest to try negotiating a temporary reduction in monthly payments. In the world of private loans (amid this economy), it can pay to ask.
Making Breathing Room with Bankruptcy
While bankruptcy [currently] can’t be used to automatically wipe away your student loan debts, what it can do is erase massive credit card debt and other consumer debt loads that are keeping you from repaying your student loans. As a result, bankruptcy can allow you to redirect your paycheck from paying out “bad” consumer debt to repaying “good” educational loans. Further, while it’s difficult, if its found that your student loans create an “undue hardship,” bankruptcy can alleviate student loan woes. Either way, relieving financial burdens early in your adult life and career can pay dividends later: allowing you to rebuild credit as you build your career and repay your educational loans earlier in the game.
As a result, if you too have been effected by the economy and are wondering how to reduce student loan debt—and stress— knowing a qualified bankruptcy attorney can also help you to conquer your creditors and face your financial fears, yielding the right kinds of support, information and insights—at a low cost— for a viable and secure future beyond our own “Great Recession.” The bankruptcy experts at the Law Offices of John T. Orcutt offer a totally FREE debt consultation and now, more than ever, it’s time to take them up on their offer. Just call toll free to +1-919-646-2654, or during the off hours, you can make your own appointment right online at www.billsbills.com. Simply click on the yellow “FREE Consultation Now” button.