Can a Lawyer Negotiate Student Loan Debt?

The cost of obtaining higher education in Florida, and throughout the rest of Florida, has risen to astronomical heights. Students are told from an early age that in order to achieve the “American Dream,” they must obtain a college or university degree and work hard in order to be successful. Still, many post-secondary education institutions oversell the value of this education, while wages for students remain stagnant. It is for this reason that so many students have to take out student loans, which they then have immense difficulty paying back.

Our student loan defense lawyers understand that student loans are the third-largest type of household debt and that it surpasses the amount Americans owe in credit card debt. It is no wonder millions of people default on their student loan repayment plans every day. Changes to the federal law in 2005 have also made it nearly impossible to discharge student loan debt in bankruptcy, with only the most extreme circumstances being the exception. If not repaid, you may face wage garnishment and other consequences. It is important to allow a debt defense lawyer to negotiate the debt on your behalf.

Negotiating a Payment Plan on Student Loan Debt

Under federal law, the businesses and organizations that disburse federal student loans must offer deferment options to debtors. Deferment options allow borrowers to postpone payments if they can show financial hardship.

Also, some lenders are required to give borrowers the chance to modify repayment plans at least once every year. The majority of student loans must be repaid within ten years, but some can be extended to 25 years in a repayment plan. That could allow borrowers to pay as little as $50 a month. Some repayment plans are also contingent on a person’s gross annual income. With this type of plan, borrowers can pay anywhere between 4 and 25 percent of their income each month.

Certain repayment plans involve step-up payments. In these arrangements, borrowers pay a fixed amount for the first one to three years. After that time, the amount they must repay steadily increases every two years for the remaining life of the loan. If a borrower is never able to earn enough to pay off the loan fully, any principal left over is often forgiven after 25 years.

An option that has been available in recent years is an income-based repayment plan. These plans cap, or limit, the amount a borrower has to pay at ten percent of a student’s discretionary income. This cap applies to loans taken out after July 1, 2014. For students who took out loans prior to that date, the cap is increased to 15 percent of their discretionary income.

This type of plan helps borrowers with modest incomes and high debt to make lower monthly payments. The size of the borrower’s family is also considered. It is important for borrowers to remember that these plans increase the life of the loan, which may mean accruing more interest during the length of the loan.

Certain organizations also provide loan forgiveness options depending on the profession of the borrower. For example, after a certain number of years of service, the National Health Service Corps. offers some degree of forgiveness on student loans. Similar options are available to those who work in public service or education.

Negotiating a Settlement

Sometimes, it is possible to negotiate a settlement with the lender. By doing this, you can offer to pay all at once, but only repay a portion of the loan. To do this, you must be able to show that you cannot repay the entire loan, while also emphasizing that you do want to pay back as much as possible. For example, you may have received a gift or inheritance from a relative and wish to use it to repay the loan, but it does not cover the full amount. A student loan lender may be willing to offer a settlement for the lower amount in order to recover at least a portion of the student loan.

It is usually advised that borrowers work with a debt defense lawyer in Florida when negotiating a settlement. A lawyer will know what you have to disclose to lenders, and what you should not. Generally speaking, lenders and debt collectors cannot collect from a person’s Social Security or disability benefits. However, in some instances, up to 15 percent may be collected.

A debt defense lawyer can determine if you are eligible for a settlement, and carefully review all the terms of the offer. An attorney will also ensure the offer is properly documented, and that it will relieve you of all remaining student loan debt so there are no surprises in the future.

Discharging Student Loans Through Bankruptcy

Before 1976, it was possible to discharge a student loan through bankruptcy. When changes to the U.S. Bankruptcy Code were made at that time, it became more challenging to do so. After strict reforms were passed in 2005, it became nearly impossible to discharge a student loan through bankruptcy. However, it can be done in some cases.

If you are really struggling financially, you may be able to show the court that repaying your student loans would place an undue hardship on you. The court will consider whether you have made good faith efforts to repay the loan, and if you are living in poverty. The court will also determine whether your current situation will continue and if so, for how long over the life of the loan. Individuals with serious disabilities or who are suffering from a terminal illness are most likely to be granted a discharge of their student loan.

Our Student Loan Defense Lawyers in Fort Lauderdale Can Negotiate Your Debt

If you want to settle your student loan debt or believe you are eligible to discharge it through bankruptcy, our Fort Lauderdale student loan defense lawyers are here to help. At Loan Lawyers, we know how to provide the strong defense you need to obtain an affordable repayment plan, or we can negotiate a fair settlement while also advising you of your bankruptcy options. Call us today at (954) 523-4357 or contact us online to schedule a free consultation