The Law Offices of William T. Peckham
Contact Us For A Reduced Initial Consultation
512-487-7604 Contact Us

The options you have if you are delinquent on your student loan

Discharging student loans in bankruptcy requires you to show extreme hardship. The possibility of ridding yourself of student loans through Chapter 7 exists, but options are extremely limited.

Student loan debt is officially outpacing credit card debt. Specific data is equally troubling.

  • Approximately 44 million Americans owe more than $1.4 trillion in federal student loans
  • Borrowers enrolled in repayment plans quadrupled over the past four years, increasing from five to 20 percent last year
  • More than 4.2 million borrowers were in default at the end of 2016, an increase from 3.6 million the previous year
  • An average of more than 3,000 borrowers default every day
  • Overall, 1.1 million (or 17 percent) more borrowers went into or re-entered default (not making a payment for 270 days between 2015 and 2016

For borrowers significantly past due in their installments, programs exist to help get out from under.

Forbearances And Deferments

Deferment or forbearance will allow you to temporarily stop making payments or reduce the installment amounts. Deferments can last up to three years for financial hardship or eligible enrollment in school. Forbearances for federal student loans usually last 12 months. Interest still accrues in forbearance and certain types of deferments. While providing immediate relief, it will increase your loan balance.

Income-based repayment plans for federal student loans allow borrowers to pay a percentage of their income on loans each month. Depending on the plan, the debt will be forgiven after 20 to 25 years. However, it is important to note that forgiving a loan is viewed as taxable income.

Income Repayment Plans

Income-driven repayment plans allow borrowers to pay only a certain percentage of their income on their student loans each month rather than what they owe under a standard 10-year repayment plan. On the other hand, if you can afford to pay more on your federal student loans, you should consider doing so because this will save you more on interest costs over the life of your loan.

No Comments

Leave a comment
Comment Information
Email us for a response

Contact The Firm

Bold labels are required.

Contact Information

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.


Privacy Policy

William T. Peckham
1104 Nueces Street, Suite 104
Austin, TX 78701
Phone: 512-487-7604
Fax: 512-478-1790
Map and Directions