student loan debt solutions

couldn't you try to rehab the loan?some places
might be receptive to that.

You are correct. debt settlement will not work with federally backed student loans. His only real option would be either consolidate them or file bankruptcy.


Student Loans In Bankruptcy

However be aware student loans are not dischargeable in bankruptcy unless you can show that your loan payment imposes an "undue hardship" on you, your family, and your dependents. Non-dischargeable debts are those debts that you cannot totally eliminate when you file for bankruptcy and will have to be paid by you.

It is almost impossible to show an undue hardship unless you are physically unable to work and the chances of your obtaining any type of gainful employment in the future are non-existent.

Under the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, privately funded student loans are treated the same way that loans funded and guaranteed by the federal government or nonprofit institutions. Prior to the new law, if you had a loan from a private-sector lender that was not guaranteed, it could be discharged under chapter 7. The new law gives these loans the same protection as the guaranteed loans.

If you would like to discharge your student loans under the "undue hardship" exception, you must file a separate motion with the bankruptcy court and then appear before the judge to explain your hardship. This is not an easy task, so if your student loans are the main part of your debt, you would be better off not facing the harshness of bankruptcy as courts are extremely reluctant to discharge student loans.

Consolidating Your Loans Under Chapter 13

Although you may not totally eliminate student loans in bankruptcy, you can consolidate them, with your other bills, in a Chapter 13 proceeding. Under this chapter, you can propose a repayment plan in which to pay your creditors over three to five years. For a Chapter 13 bankruptcy, you'll need a stable income with disposable income and must have no more than $1,010,650 in secured debt (debt involving property that your creditor might take if you don't make your payments) and $336,900 in unsecured debt. These amounts are adjusted periodically to reflect changes in the consumer price index. Chapter 13 will also stop collection action against you.

If you include your student loans in a Chapter 13 repayment plan, depending on certain factors such as the size of the loan, the number and amount of your other debts, and the amount of your disposable income, you might be able to make a dent in the loan balance over the life of your plan. However, you will still owe whatever student loan debt remains when you complete your plan.

Hope this helps :D

Either do the rehab or consolidate with Direct Loans under the income contingent repayment plan.