If I am being sued for a personal student loan, what are my options since I cannot pay the entire balance now?
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If I am being sued for a personal student loan, what are my options since I cannot pay the entire balance now?
I took out a personal student loan 8 years ago. It has been bought several times by other companies. I just received legal papers saying that I am being sued. The original loan amount was $20,000. They want $37081.33. I do not own a home.
Asked on December 17, 2011 under Bankruptcy Law, Texas
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 12 years ago | Contributor
If this was a fully private loan--which means no government backing or guarantees for the loan program--you may be able to declare bankruptcy to discharge it. But if it was a government or government-backed/guaranteed loan, you probably do not have any options, other than trying to work out a payment plan you can meet and they will accept. That is because government-backed student loans are not dischargeable in bankruptcy, so you have no way to eliminate them. (Technically, they may be discharged in cases of extreme hardship, but I believe less than one-tenth of 1 percent of people who apply for this get it...you basically must already be living in poverty with no hope of a better future to qualify.)
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