What to do if I can’tpay my private student loans?

UPDATED: Jan 14, 2011

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What to do if I can’tpay my private student loans?

I have $150,000 in student loan debt and a majority of my loans are private loans. My work field is hurting right now. I am working 2 jobs and only bring in a monthly income of $1,900; my monthly payments are $1,600. What is my best option? They told me that they could lower it to $1,200 a month for the next 2 years but that is still too high. Is hardship bankruptcy possible for me, or is income based repayment option available for Sallie Mae private loans?

Asked on January 14, 2011 under Bankruptcy Law, Ohio


M.D., Member, California and New York Bar / FreeAdvice Contributing Attorney

Answered 12 years ago | Contributor

There are 2 situations where you may be released from your repayment obligation: 

1.  Bankruptcy:  Generally student loans are not dischargeable in bankruptcy.  However, it is possible if you can prove that repaying such loans would present a severe hardship for you.  This is a quite difficult standard to meet.  In making a determination of "severe hardship", the bankruptcy judge will consider your income/expenses, the reason for non-payment, how long this reason(s) is likely to continue, and how hard you tried to make your payments.

2.  Cancellation:  In very special cases, you may be able to cancel all or a portion of your student loan.  This means that you no longer have to pay it, or at least all of it.  However, you'll have to meet specific conditions depending on the type of loan you have (typically having a disability or severe economic hardhip will qualify you).   

For more information you can contact The Student Loan Borrower Assistance website at www.studentloanborrowerassistance.org discusses conditions for the cancellation or deferment in more detail and how to apply for such a cancellation.  You can also contact your loan holder or the Federal Student Aid office at: 800-621-3115 or  http://www.ed.gov/offices/OSFAP/DCS/index.html) to determine if you qualify for cancellation.

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although AttorneyPages.com has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

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