Student Loan Warning Stages

You have a good job, a bright future and your educational costs are reasonable and affordable. The payments are easy to make and you are considering a private consolidation loan to get a lower interest rate on your loan balances.

Our Advice

Do NOT obtain a low-interest rate private loan as the side effects of a private student loan are SEVERE. We never recommend private student loans because if you don’t pay, you simply get sued. By converting from a government student loan, you give up all of your guaranteed rights regarding future payment adjustments. If a tragedy occurs such as loss of your job or a bout of Covid-19 virus, you are stuck with no options.

In this stage, you struggle to make your payments which are now too high. This is a warning that you need help. If you allow your payments to become over 90 days delinquent, your student loans will be reported to the credit bureau. Your credit score will be downgraded and your ability to borrow is damaged for years.

Our Advice

Take action quickly to lower your payments and avoid the 90-day deadline. The side effects of obtaining a lower monthly payment prior to 90 days are mild. A limited effect is that you will have to annually certify your financial situation to stay in compliance. You can choose from a variety of federal repayment plans to make your monthly payments more manageable. It is important to choose the right repayment plan, especially if you are married and your spouse has no student loan debt. However, a monthly payment of zero is possible at this point.

In this stage, you are over 90 days delinquent and still can’t make your monthly payments. Your credit score has been reduced but you are still eligible for a variety of Federal repayment plans.

• You must ACT IMMEDIATELY to avoid your payments from becoming over 270 days past due
• It takes time to get your payments adjusted. It is unsafe to postpone action due to the unforgiving 270-day period on delinquent loans

Our Advice

Act immediately to lower your payments and avoid the 270-day deadline. You can still choose a variety of federal repayment plans to make your monthly payments manageable. It is important to choose the right repayment plan, especially if you are married and your spouse has no student loan debt. A monthly payment of zero is still possible at this point. The side effect of the replacement loan is mild. You will have to annually certify your financial situation to stay in compliance.

In this stage, your loans are transferred to a collection agency and a late fee of 18% or more will be added to your total debt balance. If you once owed $40,000, you now owe $47,200. The government can now garnish your wages and intercept your social security benefits, tax refunds and other funds that may be payable to you.

Our Advice

You can rehabilitate your loans in a lengthy 9-10 month process or you can use a federal consolidation to get out of default. With either of these options, you can elect a repayment plan that you can afford. A zero monthly payment is still possible. However, this treatment takes time and is work-intensive. You will have to recertify your financial situation every year. More importantly, these are one-time remedies and should only be used as a last resort.

The side effects are severe. Your loan balance has grown significantly because late fees were added. It is going to require up to 25 years to resolve your debt. It will still require selection of the right repayment plan for you and your family.

• You want to give up and file bankruptcy. Unfortunately, student loans are rarely discharged in bankruptcy and collectors will be calling as soon as you are out of the bankruptcy protection to garnish your wages.
• You take a job in public service. If you prepare your documents correctly, you can have your loans forgiven after 120 months of qualifying loan payments.
• You have a permanent total disability and your loans may be forgiven if you provide the required documentation.
• You are in the military and about to be deployed or are deployed.

This is complicated. It is similar to understanding the Internal Revenue Code without legal and accounting training & expertise.

Like a tax return, you can do it alone or hire a professional firm who specializes in student loan law and accounting to help you.

E-mail us or call us for a free analysis of your situation. You will receive a secure link to upload your student loan data. We do not ask for sensitive information, login information or your passwords. This link will give us a snapshot of your current situation.

Once your information is received, attorneys and accountants will review your overall situation. We will give you our best advice and recommendations. If you want to do it yourself, our advice is a gift of collective expertise to help your current situation.

If not, we will quote you a flat fee for us to implement our advice. Our fee will be based upon the benefit received from our services. Payments can be arranged to make it convenient for your budget.

Once hired, we will start immediately. We will schedule a virtual or telephone conference to discuss your situation. We want to make sure that we understand your goals and that you understand our efforts on your behalf.