Written by: Keun H. Maeng
Even though we anticipate that everything will go according to our plan, uncontrollable external factors can hold us back from achieving our well thought out financial plan. Under our current economic turmoil, the unemployment rate is higher than ever from the past decade, hence not only jobs are being lost but also more bankruptcies are being filed. As for students, even though we are not overwhelmed by myriad debts, there is an obligation that we dedicated to have before entering in our institutions: student loan.
Whether you or your parents are responsible for the loan, in cases where your family is undergoing bankruptcy, federal student loans are difficult to get rid of in bankruptcy. The only way to discharge student loan is to prove that the payment imposes an “undue hardship” on them or their family. Since it is very difficult to actually prove this when filing bankruptcy, the student loan would often be left in your liabilities even though you have filed for bankruptcy.
Private loans, however, are a bit different. Under the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, private loans policies are similar with federal loans when it comes to bankruptcies. However, the difference comes when filing for Chapter 13. Under this is the case, students can consolidate their loans with the other debts they are filing for bankruptcy and repay the debt over the course of five years. Therefore, under such case, the remaining private student loans can be later paid back after the Chapter 13 payment has been fulfilled.
Student Loan
ReplyDeleteIf you have more than one loan, then student loan consolidation is for you. Loan consolidation is the process of reducing your many loans from different lenders and issuing a single loan from a new provider. There are significant benefits in loan consolidation, resulting in lower monthly payments and much less paperwork.
Student loan repayment options include standard repayment. Most student loan repayment periods are for ten or fewer years. The last repayment option is to pay a graduated amount during the repayment process, stepping up about every two years.
When selecting a graduated repayment option you make your payments over an extended time period. This graduated payment schedule is good for those who need the lowest repayment amount early in their repayment schedule. Once a loan is consolidated, your interest rate is fixed. This is true except when using the graduated repayment option.
This automatic process simplifies your payment and ensures that you never miss a payment. When you start to repay your school loans, consider student loan consolidation. Loan consolidation makes the repayment process easier to manage and provides flexibility.