There Isn’t a Solution to Every Student Loan Problem

In this TikTok Live, we discuss various aspects of student loans, bankruptcy, and debt collectionin a lively Q&A format, providing insights into navigating these complex financial issues.

Key Topics Covered

Borrower Defense to Repayment

• Definition: A federal forgiveness program allowing borrowers to have their student loans forgiven if they can prove their school misrepresented the quality of their education.
• Eligibility: Must prove that the school’s misrepresentation caused you to take out the federal student loans.
• Process: Submit a claim to the Department of Education with supporting evidence. The review process can take years.
• Resources: Numerous online groups and resources can provide documents to strengthen your claim.

Challenges in Student Loan Forgiveness

• Lawyer Assistance: Not all lawyers claiming to assist with student loans are truly specialized in that area. Many are primarily bankruptcy lawyers.
• Limitations: There is no universal solution for all student loan problems, but various programs can provide relief, such as income-driven repayment plans, public service loan forgiveness, and borrower defense to repayment.

Co-signing Student Loans

• Impact on Credit: Co-signing a loan means the debt will appear on your credit report. If the primary borrower defaults, you are responsible for the payments.
• Advice: Have a serious conversation with the borrower if they are not making payments.

FAFSA and Federal Student Aid

• Importance: Submitting the FAFSA (Free Application for Federal Student Aid) is crucial for determining eligibility for federal aid.

Bankruptcy Considerations

• Chapter 7 and Chapter 13: Different rules apply depending on the type of bankruptcy. For instance, Chapter 13 may require court permission to take on new debt.
• Asset Exemptions: Each state has different exemption levels for assets you can keep during bankruptcy.
• Professional Advice: Consulting a bankruptcy lawyer can help ensure a smooth process and prevent potential issues.

Income-Driven Repayment (IDR) Plans

• Choosing the Right Plan: IDR plans can lower monthly payments and lead to forgiveness after 20-25 years.
• Flexibility: If you choose the wrong plan, you can change it later.

Dealing with Debt Collectors

• Payment Allocation: If a debt collector refuses to show where your payments went, you may need to sue for an accounting.
• Defensive Approach: Stand your ground if you believe you do not owe the debt, and let a judge decide if sued.

Special Cases and Questions

• Medical Debts: Discuss specific situations with a bankruptcy attorney to explore possible solutions.
• PSLF (Public Service Loan Forgiveness): Concerns about program elimination are common, but current guidelines should be followed.

Listener Questions

• Borrower Defense: Can file claims if defrauded by the school.
• Bankruptcy and Car Loans: Can keep the car if payments continue.
• Credit Report Issues: Obtain free credit reports from annualcreditreport.com to check for creditors and judgments.

Join me on TIkTok every Monday and Wednesday for more advice on handling your debt problems.