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Monday, August 12, 2019

You’ve Defaulted on Your Student Debt: Now What?

As the cost of a college education continues to increase, so does the amount of outstanding student debt. Each year, millions of people end up defaulting on their student loans. According to the Federal Reserve Bank of New York, by the end of the first quarter of 2019, nationwide student debt hit a whopping $1.49 trillion. 

In just Ohio alone, student debt (which is in the tens of billions), statistics point to a default rate higher than the national average. While all of this is overwhelming to say the least, for those who qualify, you may have the opportunity to eliminate your debt through either student loan discharge or student loan forgiveness.

Though both student loan discharge and student loan forgiveness work to relieve borrowers of their obligations to repay student debt, the requirements to qualify to differ.

Student Loan Discharge

Student loan discharge may be available to people who have serious financial issues because they have suffered severe personal circumstances, such as identity theft or disability. This is made available for various federal loans, such as Federal Direct Loans, Perkins Loans, Federal Family Education Loans, and Parent Plus Loans. 

There are different circumstances that might make you entitled to have your student loan discharged. Such circumstances include:

  • Death
  • Fraudulent Misrepresentation
  • Identity Theft
  • Total and Permanent Disability

In some cases, the bankruptcy court will discharge your federal – or even private – student loan if you can demonstrate that you are suffering severe undue financial hardship and you honestly attempted to pay your loan back. You may be able to have your loan discharged through bankruptcy, although this can be quite difficult. 

Student Loan Forgiveness

Student loan forgiveness is generally an option for certain people who work qualifying public service careers. This is a way to show appreciation for those who work in a job that benefits the community. To qualify, these individuals must have worked full-time in specific civil services, education, and healthcare positions for a specific period of time. Just some of these careers include:

  • Doctor
  • Firefighter
  • Nurse
  • Police Officer
  • Social Worker
  • Teacher

Examples of programs that offer forgiveness include:

  • Public Service Loan Forgiveness – Those who have worked in a public service position for 10 years but have made their student loan payment for the last 120 months.
  • Teacher Loan Forgiveness – Those who have taught in a school that qualifies for five years and have met other requirements. They may have up to $17,500 of debt forgiven.

Miami Valley Bankruptcy Helps Those in Ohio Who Are Dealing with Student Debt Issues

If you or a loved one has been late paying your student loans or if they are currently in default, it can have serious consequences that may affect your future long-term. That is why it is so important to consult with a knowledgeable and experienced Ohio bankruptcy attorney

At Miami Valley Bankruptcy, we can help guide you through your options for managing your student debt depending upon your type of loan and specific circumstances. We will fight help reduce or relieve your debt. To learn more or to schedule a free consultation, call us at 937-262-4789 today!


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Miami Valley Bankruptcy, Brian Lusardi, Esq., assists clients with Bankruptcy matters including but not limited to: Common Myths, Cost of Bankruptcy, Chapter 7 Bankruptcy, Chapter 13 Bankruptcy, The New Bankruptcy Law and Personal Bankruptcy in Xenia, Ohio, and the cities of: Wilberforce, Alpha, Spring Valley, Dayton, Bellbrook, Yellow Springs, Cedarville, Fairborn and Clifton; and the counties of Greene and Montgomery.



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