Student Loan Debt & Bankruptcy in White Plains
Discharge STudent Loans in Westchester County
In 2020, national student loan debt reached $1.56 trillion, with 10% of borrowers defaulting on their loans. Student loan debt is at an all-time high, and many can't afford the costs. There is hope, however, and bankruptcy is a viable option for many students who qualify.
If you’re among the many borrowers facing massive student loan debt, you may feel like your situation is hopeless; but, that doesn’t have to be the case with the right help. A student loan debt attorney can help guide you through your financial options and determine if bankruptcy is right for you.
Need help with student loan debt and bankruptcy? Call Natasha Meruelo, Attorney at Law at (914) 752-5098 or contact us online to schedule a free consultation with our New York student loan bankruptcy lawyer.
July 2023 Student Loan Debt Forgiveness Update
On June 30, 2023, the Supreme Court struck down the Biden-Harris Administration’s proposed loan forgiveness program. The Department of Education’s student loan suspension program will expire in the upcoming months. Interest will accrue again on federal student loans on September 1, 2023, and repayment will resume in October 2023.
If you applied for a student loan discharge through the now-defunct program, you will unfortunately still be responsible for this debt. However, the Department of Education is currently considering alternative options to give borrowers relief from student loan debt and exploring policies that can provide debt relief to as many borrowers as possible.
If you are unable to make payments when they resume in October 2023, you may be able to reduce your monthly payment amount. The Department of Education is making several changes, including implementing the “return-to-repayment" program which is designed to get borrowers back into active repayment status. This program will allow borrowers who have missed payments some grace by not reporting them as delinquent on credit reports or causing them to go into default on their loans during this time. The hope is to give borrowers time to contact their student loan servicers and discuss their options, including whether the new SAVE program may be right for them.
The SAVE Plan is a new IDR option effective July 1, 2024, which will replace the REPAYE Plan. The SAVE Plan will allow more income to be exempted from calculating a borrower’s monthly student loan payments, leading to lower payments compared to the other IDR plans.
In addition, despite the Supreme Court ruling against the Biden-Harris Administration’s Student Debt Relief Plan, some loan forgiveness is still possible. The Department of Education unveiled plans to provide relief to 804,000 borrowers by forgiving a substantial $39 billion in federal student loans starting in July 2023. The student loans would automatically be discharged in the following weeks. This relief came as a part of the existing income-driven repayment (IDR) plans, offering much-needed relief to eligible borrowers. Under this loan forgiveness initiative, borrowers would be eligible for forgiveness if they had diligently made monthly payments for 20 or 25 years within the framework of an IDR plan or a standard repayment plan.
Eligible borrowers would be notified by the Department and student loan discharges would begin 30 days after the notification is received. Those who wish to opt out of the debt discharge have the option to do so.
To learn more about options that may be available to you or how to avoid scams, please reach out to an experienced student loan lawyer near you in White Plains at Natasha Meruelo, Attorney at Law.
Seeking a hardship discharge or discharge for other possible reasons pursuant to a Chapter 7 or Chapter 13 bankruptcy may be an option for those who cannot afford to pay their student loans. Both types of bankruptcy can be viable options or you may only qualify for one depending on your situation. So, what is the difference between Chapter 7 and Chapter 13? I’ve written a Q&A that explains this in further detail.
What Is The Brunner Test?
Currently, borrowers looking to discharge their student loans in bankruptcy in our area need to prove that repayment would impose an undue hardship (known as the Brunner test) or that alternatively, the type of debt at issue does not qualify as the type of student loan envisioned by the bankruptcy code as non-dischargeable.
What Is Considered an Undue Hardship?
An undue hardship means that paying your loan makes it impossible to maintain a minimal standard of living based on your current income and reasonable expenses.
However, you must also show a few other things to qualify for an undue hardship:
- That you have made a good faith effort to repay your loan
- And that “additional circumstances exist indicating that the state of afairs is likely to persist for a significant portion of the repayment period”
If you can make a successful showing of all three elements, the bankruptcy court may fully or partially discharge your loan. Your case's outcome is not guaranteed, but a qualified attorney can help you make a plan to protect your future.
“Natasha Meruelo is professional, knowledgable and a solid attorney. She made sure I was well informed, prepared, and empowered throughout the court process. Having her support was invaluable. I am so grateful I followed my intuition and chose her to represent me. I highly recommend her!”
There is another option in our district when you file your bankruptcy case which is referred to as our student loan mediation program. Through this option, prior to filing an adversary proceeding seeking to discharge the student loan debt (which can be quite expensive), you can try to mediate your issue with your student loan lender or servicer and see if an affordable repayment or other arrangement can be reached. My office is experienced in assisting individuals with student loan issues and can also assist you with the mediation process.
Discuss Your Case With a Compassionate Attorney
The decision to file for bankruptcy is not an easy one to make. Bankruptcy is complicated and can affect your credit score. The most important step you can take when considering bankruptcy for student loans is talking about your situation with a lawyer like myself.
I have over a decade of experience helping clients with bankruptcy in White Plains. When you feel hopeless over your student loan debt, choose an attorney who will give you the personalized attention you need.
If you need a student loan bankruptcy lawyer to help you with student loan debt, contact Natasha Meruelo, Attorney at Law, today.
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