- Get your student loans out of default. After nine months of nonpayment your student loans go in to default status. Making the minimum payments on time will keep you out of default.
- Ask for a deferment or forbearance. If you can’t pay your loans on time, ask for a deferment. A deferment can postpone payments for up to three years. Depending on your loans, interest may or may not continue to accrue if you’re in deferment. You can also request a forbearance, which pauses your loan payments for up to one year. A forbearance has different eligibility rules and interest continues to add up during the forbearance period.
- Consolidate your student loans. You can avoid default by consolidating or refinancing your student loans. Both of these options can keep your payments low and will allow you to make one payment, rather than multiple payments each month. You may qualify for a lower interest rate. If you have federal student loans, be very careful about refinancing with a private lender. You may lose federal protections if you refinance with a private lender.
- File a bankruptcy case. Filing a bankruptcy case will put you under the protection of the court. There are two main case options – filing a chapter 7 or filing a chapter 13. It depends on what type of help you need. A chapter 7 can stall the student loan repayment / collection process for 4-5 months while eliminating other debt so that you have freed up finances to better deal with your student loans. A chapter 13 would allow you to set the repayment amount yourself for the next 3-5 years and the student loan creditors will have to accept your terms through your chapter 13 plan.
If you are struggling with student loans, you have options. Set up a free consultation today to discuss all of them so that you can decide what option suits you the best.