02 Jun I can barely make my student loan payments. What to do?

Q. I can barely make my student loan payments and I’ve heard they may forgive some debt? I don’t want to ruin my credit but I really can’t afford it. I’m unemployed and benefits will run out soon and I don’t want to have to declare bankruptcy. What should I do?
— In trouble

A. Crushing student loan debt is unfortunately, not uncommon.

There are several steps to approach this.

First, you need to determine if they are federal or private loans, said Karra Kingston, a bankruptcy attorney in Union City.

“If they are federal loans, then you may be able to get on an income-based repayment plan where you only have to pay back a percentage based on your income,” she said. “If they are private loans, then refinancing can be an option.”

As of now, there is nothing definitive about whether or not any amount of student loans could be forgiven through legislation, she said.

If you can’t pay your student loans because you have other debts, then bankruptcy may be the best option, Kingston said, noting that either way, the first step is to contact your lender to see if they can put you on a lower monthly repayment plan.

But keep in mind that student loans aren’t really dischargeable in bankruptcy, Kingston said.

“The only way is to show that there is an undue hardship which is very hard to do, but there have been a few cases where people have gotten them discharged,” Kingston said. “A Chapter 13 bankruptcy may be able to help you pay the student loan arrears over time.”

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This story was originally published on June 2, 2021.

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