Student Loan Relief in Raleigh, NC: Income-Based Repayment and Bankruptcy
Student loan debt is one of the most challenging financial burdens many people face today. If you’re struggling with your student loans, you may feel overwhelmed by the weight of your payments, especially if your income isn’t keeping up with your debt. Fortunately, there are two important avenues to explore when seeking student loan relief: Income-Based Repayment (IBR) and bankruptcy. Each option offers different benefits, and understanding how they work can help you make the best decision for your financial future. We can determine if you can probably have your Student Loan payments lowered for $200, and if so, we charge $300 more to try and modify them,
To see if we can modify your student loans we will need:
- Your last Federal Tax Return, and
- Your NSLDS file
For instructions on how to obtain your NSLDS file, see below.
Income-Based Repayment (IBR)
Income-Based Repayment (IBR) is a federal program designed to help borrowers manage their student loan payments by tying the amount they owe each month to their income. If you’re eligible for IBR, your payments will be adjusted to a percentage of your discretionary income, making it easier to meet your financial obligations while covering basic living expenses.
Here’s how IBR works:
- Payments Based on Income: There are different forms of IBR, and if you are in one, we can probably find one with lower payments. If your monthly loan payments are too high compared to your income, IBR can lower them to a more manageable level. For most people, this means payments are capped at 10% to 15% of their discretionary income. This allows you to make affordable payments without struggling to make ends meet.
- Family Size Matters: The size of your family is also considered when determining your IBR payment. Larger families often have more expenses, so this will be factored into your repayment plan.
- Forgiveness After 20-25 Years: One of the most attractive features of IBR is that if you stay in the program and make consistent payments, any remaining balance on your loans can be forgiven after 20 or 25 years (depending on when you took out the loan). This can be a huge relief if your income doesn’t rise significantly over time, as you won’t be stuck paying loans indefinitely.
- Only for Federal Loans: It’s important to note that IBR is only available for federal student loans, not private loans. If you have private student loans, you’ll need to explore other relief options.
Bankruptcy and Student Loans: What You Need to Know
Traditionally, student loans have been very difficult to discharge in bankruptcy. However, recent developments and growing discussions around student loan reform are opening up the possibility for greater relief through the bankruptcy process. While most student loans still cannot be easily discharged, there are some situations where bankruptcy could help.
Here’s what you need to know about bankruptcy and student loans:
- Undue Hardship Exception: While it’s rare, some borrowers may be able to discharge their student loans through bankruptcy if they can prove “undue hardship.” This typically requires showing that repaying the loan would prevent you from maintaining a basic standard of living, that this hardship will continue for a significant portion of the repayment period, and that you’ve made a good-faith effort to repay the loan.
- Chapter 7 and Chapter 13 Bankruptcy: While student loans are not automatically wiped out in Chapter 7 or Chapter 13 bankruptcy, the filing can still help by putting an automatic stay on all debt collection efforts, including student loan payments, while the bankruptcy case is ongoing. This can provide temporary relief and give you a chance to regroup financially.
- Future Reform: There has been increasing discussion about changing bankruptcy laws to make student loans easier to discharge. While no significant changes have been made yet, there’s hope that future reforms could offer more substantial relief for borrowers buried in student loan debt.
What’s the Best Option for You?
For most people struggling with student loans, Income-Based Repayment (IBR) is the more accessible and effective solution. It allows for lower monthly payments, and if you qualify for forgiveness after 20-25 years, you may not have to pay back the full amount. Bankruptcy can provide relief in extreme cases, but it’s more challenging to use for student loans under current laws.
If you’re unsure which option is right for you, Cameron Bankruptcy Law in Raleigh, NC can help. We’ll work with you to understand your situation and guide you through the process, whether that’s applying for IBR, exploring bankruptcy, or keeping you informed of potential future changes in student loan law. Let us help you find the best path to relief and a brighter financial future.
Don’t let student loans hold you back—contact us today to discuss your options for student loan relief in Raleigh, NC!
A Few Links:
Student Loan Repayment Estimator
PLEASE! Refer your friends to Cameron Bankruptcy Law or write a brief online review!
(919) 627-7748
