Originally posted 2010-12-12 04:12:02. Republished by Blog Post Promoter

Are you currently falling behind on your own student loan repayments and worried the Department of Education will take your tax refund, garnish your wages or sue you? Bankruptcy will most likely not eliminate your student loans, as a result of recent alterations in the law. But studying your choices and taking action can defuse the situation before any damage is done to your credit standing or bank account.

Your first concern really should be in ensuring that your loan isn’t in what’s called “default,” usually thought as not making a payment or attempting to renegotiate payments for the past 180 days. If you’re in default, your lender is very unlikely to renegotiate your loan. However, you can ask your lender to establish a “reasonable” repayment schedule, depending on info you supply such as monthly income, other debts, dependents and so on. After you have made payments as agreed for six months, you could then be eligible for a new loan.

Deferment of Loans

If you ever aren’t in default, you just might get your student loans “deferred,” which implies repayment will be delayed if you:

  • Are permanently or temporarily totally disabled
  • Are completely unemployed
  • Have a federal loan and can prove that you are suffering an economic hardship (as defined by the lender)
  • Are enrolled in school
  • Are in the military fulltime
  • Are providing medical care in a poor area or to the needy

You must send in paperwork from the lender and follow through to make certain it’s processed correctly. And with some loans, the interest on the loan will carry on and build.


If you do not qualify for a deferment, you just might postpone your student loan payments during a specific period of time through what’s called “forbearance.” It’s easier to get a forbearancethan a deferment, but you’ll continue to rack up interest even through the forbearance period.

Canceling Your Loan

You might be able to request that your lender cancel your student loan entirely if you:

  • Are permanently or temporarily totally disabled
  • Are in the military fulltime
  • Are teaching in a poor area or to needy students
  • Are providing medical care in a poor area or to the needy
  • Are providing certain types of community service, such as serving in the Peace Corps
  • Are working in law enforcement, with certain loans
  • Withdrew from school or the school closed before you could complete your degree and you did not receive a refund

Renegotiating or Refinancing

In the event you aren’t in default, and do not qualify for deferment, forbearance or cancellation, you may still have the ability to renegotiate a new repayment plan that’s doable in your current financial circumstances. In case you extend the time for repaying your loan, you’ll find yourself paying more interest. Kinds of repayment plans include:

  • Graduated repayment, with payments that start out lower and increase every few years. If you expect increases in income over time, this makes sense.
  • Extended repayment, with a fixed monthly amount that goes longer than the period of your current loan (some as long as 30 years)
  • “Income-sensitive repayment,” which fluctuates with your income (usually measured annually)


You can probably consolidate all your student loans together at the renegotiated rate. You will most probably find yourself paying more interest if your loan period is extended, but you might get a lesser interest rate to balance it out. Most consolidation lenders won’t consolidate student loans that total less than $7,500.

In case you go with a consolidation loan, you will want to ensure you can accelerate payments with no penalty, just in case your financial situation improves as time passes.

For anyone who is having difficulty making your student loan payments, it’s most crucial to act quickly, before you’re in default and you’ve damaged your credit rating. The sooner you keep yourself well-informed on your options and take action, the better.

For help with an Augusta GA chapter 7 bankruptcy, contact a bankruptcy attorney Augusta GA. A bankruptcy lawyer Augusta Georgia could give you the help you need.

Filed under: Debt Collection Articles

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