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Student Loans

Student Loans Attorney Serving Broomfield, Colorado

A growing number of Americans are burdened by student loan debt. These large payments lead to an increase in people filing for bankruptcy. 

Even though student loan debt is one of the top causes of financial stress and bankruptcy, it is highly uncommon for a court to allow it to be dismissed in bankruptcy.

However, there are a few exceptions. Our experienced student loans attorney at the Law Office of Clark Daniel Dray will help you understand your choices for dealing with student loan debt. 

Undue Hardship

One of the requirements you must meet before discharging student loan debt is undue hardship.

If you can show the court that your student loan debt is causing you and your family undue hardship, you might be able to have it forgiven. Our CO bankruptcy attorneys have the necessary bankruptcy court experience to assist you in proving this.

What is a Student Loan?

A student loan is money borrowed to pay for college from the government or a private lender. You must repay the loan in the future, and the interest accrues over time. The funds typically cover tuition, lodging and board, books, and other costs. 

How Do Student Loans Work?

 student loans attorneyFilling out the Free Application for Federal Student Aid (FAFSA) is how people acquire federal student loans. Students and their parents fill out a form with their financial information, then forward it to the student’s top schools.

Each school’s financial aid office crunches the figures to determine how much money the student is eligible for and then sends them an “award letter” detailing their financial assistance.

Students apply directly to the lender for private student loans. However, the student must sign a promissory note for federal and personal loans. This is a legal document where the student promises to repay the loan.

What Are the Different Types of Student Loans?

Federal and private student loans are the two most common categories. The primary distinction is that the government provides federal loans. 

In contrast, private loans can come from various places, including 

  • banks, 
  • colleges, 
  • credit unions, and 
  • state agencies.

Federal Student Loans

Direct Subsidized Loan

These are undergraduate loans for students who demonstrate financial need depending on their FAFSA. 

The government pays the interest until the loans are repaid in full. 

There is a six-month grace period once the student quits school or dips below a particular number of hours before repayment begins and interest accrues.

Direct Unsubsidized Loan 

These are undergraduate or graduate loans that do not need students to show financial necessity. The government does not cover the interest on unsubsidized loans. Thus interest accrues from the moment the institution receives the funds.

Direct PLUS Loans 

These are loans that parents or graduate students can take. These need a credit check and a separate application from the FAFSA.

Private Student Loans

You need to know about private student loans because they’re often more expensive and have higher interest rates than federal loans, and students must begin making monthly payments while still enrolled in school.

All of the loan’s terms and conditions are decided by the lender. Furthermore, the student is accountable for any interest payments—the government will not assist.

What Are the Different Student Loan Repayment Options?

If you decide to take out student loans, you are also deciding for your future self—the decision to pay monthly payments for the next ten or more years of your life. Here’s a short rundown of what you could be up against.

Repaying Federal Loans

Standard Repayment Plans 

The government or your lender provides a schedule with a defined monthly payment amount. The plan for government loans is usually ten years. The terms of private loans will differ.

Graduated Repayment Plans

The payments start low, but they gradually rise over a few years. Everything is still on track to be paid off in about ten years.

Extended Repayment Plans 

For borrowers with more than $30,000 in outstanding loans, these programs prolong the payment period beyond the standard 10-year period. The payments are planned to pay off the debt in about 25 years and might be set or graduated.

Income-Based Repayment Plans

Payments are based on a percentage of your income under these programs. After deducting taxes and personal costs, you’ll usually pay between 10% and 15% of your income. 

Every year, the payments are computed to account for factors such as the size of your family and your current salary.

Income-Contingent Repayment Plans 

This plan is similar to the income-based program, except it is based on 20% of your discretionary income. 

Every year, the rates are modified, and the amount can be forgiven — and taxed — over time (usually 25 years).

Income-Sensitive Repayment Plans 

These plans are identical to the other income-related programs, except instead of your discretionary income, the payment is based on your total income before taxes and other expenditures. 

It is estimated that you will pay off the debt in ten years.

Repaying Private Loans

Because private loans are agreements between you and the lender, the lender sets the payment terms. Each month, you’ll pay a certain amount that includes both principal and interest, and the payments are generally fixed for a particular period.

Any modifications to that plan, such as a graduated payment schedule, would have to be worked out with the lender (you could always try bribing them with something).

What Are the Different Student Loan Debt Relief Options?

When a load of student debts becomes too much to bear, obtaining relief from this debt with the help of our skilled student loans attorney can be possible through:

Debt Consolidation

Consolidating your student loans, other debt or a mix of the two can minimize the number of debt payments you have to make while potentially lowering the amount of money you have to pay each month. Debt consolidation, on the other hand, is not for everyone and, in certain situations, might be damaging rather than beneficial. 

So, before pursuing this student loan debt relief option, make sure you do your homework and consult with our knowledgeable student loans attorney.

Student Loan Forgiveness

Student loan forgiveness may be a possibility for certain people. This student loan debt reduction option is often designated for persons who have had student loans for an extended period and are employed in particular industries.

Filing for Bankruptcy

Although declaring bankruptcy will not dismiss your student loan debts, it will help you discharge other debts, free up money, and put you in a better position to pay down your student loans.

What Are the Necessary Elements for Settling Debt?

Several elements must generally be present to get a decrease in the balance you owe a creditor through debt settlement:

You Must Be in Default of the Obligation

Paying your creditors according to their conditions is the most excellent bargain. So they have no motivation to give you a break as long as you’re doing this. Unfortunately, your problems are rarely enough to get a transaction. You must demonstrate a risk to persuade the lender to take less than the whole amount owing. 

This is accomplished by refusing to pay. After three months of non-payment, many creditors will start taking less than the whole debt.

You Typically Need Lump Sums of Cash to Settle Debt

Your creditors will not accept a commitment to pay 50% of the total outstanding instead of a promise to pay 100% of the balance owed. 

However, if you are not paying them and are a credit risk, your creditors may take 50% or less of the total, provided it is paid in one lump payment in the near term (i.e., a couple of weeks). 

While it is occasionally feasible to settle debts for a fraction of what is due by making periodic payments, one-time payments usually result in lower settlements. 

Furthermore, lump-sum payments eliminate the possibility of default. Defaulting on settlement payments is the worst-case situation for a debtor trying to settle their obligations. 

This is because most settlement agreements indicate that the settlement agreement would be canceled (i.e., default). After then, the debt outstanding usually reverts to 100 percent plus interest, less whatever settlement payments you made.

Not All Debts Can Be Settled

Only a few unsecured debts, such as credit cards and medical expenses, may usually be addressed. 

You can’t pay off most secured loans (like a mortgage or a vehicle loan). Suppose you don’t pay a secured obligation, and the creditor seizes the collateral. You may usually resolve the shortfall responsibility with the creditor (i.e., the amount owed on the debt minus the amount the creditor gets selling the collateral after repossession). 

Furthermore, settling some unsecured debts might be difficult, if not impossible. Federal student debts, for example, are exceedingly difficult to repay since they are not dischargeable in bankruptcy. Taxes and other government obligations (such as SBA loans) have official settlement procedures that, like bankruptcy, assess your assets and income to establish your ability to repay.

What Are the Circumstances When Our Skilled Student Loans Attorney Can Help You?

There are a few frequent instances in which engaging our knowledgeable student loans attorney is a clever idea, such as when:

You’ve Defaulted on Student Loans

Defaulted private student loan borrowers have fewer choices than defaulted federal student loan borrowers. Your lender or loan servicer may attempt to sue you, and if successful, they may be able to garnish your earnings or other assets. Our student loans attorney can lessen or prevent those damages by defending you in court.

Your Debt is in Collections

If you owe money on your student loans, a debt collector may try to work out a payment plan with you or demand full payment, sometimes using harsh techniques. Our student loans attorney can assist you in negotiating with the debt collector to reduce the amount you pay and the impact on your credit score.

You’re Considering Filing for Bankruptcy

Bankruptcy is a complex and time-consuming process for getting rid of student debt. While the cancellation of student loans in bankruptcy is not impossible, it is exceptionally uncommon. Hiring our experienced student loans attorney may improve your chances of success or, at the very least, provide you with a fair view of your chances.

Your College Has Deceived You About Your Career Prospects

If you feel your college or institution deceived you, our student loans attorney will help you get a discharge of any remaining debt. For example, you may be entitled to debt cancellation if your alma mater willfully deceived you about your career prospects after graduation.

Get in Touch With Our Student Loans Attorney Today

Are you looking for a way to get out of your student debt? If this is the case, contact our experienced student loans attorney at the Law Office of Clark Daniel Dray. Our trustworthy student loan attorney has years of combined legal expertise and the legal knowledge, abilities, and insight you can rely on to assist you in successfully handling your debt concerns.

Since our inception, our student loans attorney has delivered the finest quality debt relief services to individuals, families, and companies in Broomfield, Colorado. When you entrust us with your most sensitive financial concerns, you can be confident that our student loans attorney will work tirelessly to ensure that you get the best possible results and remedies.

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