Sorry for the long post. There have been a few student loans threads already and I realized that others were in the same boat as me so I thought I’d start a thread.
First and foremost, the dept of ed has advised me that as long as I have an eligible federal loan I should be eligible for forgiveness even if I’m in a chapter 13. Let’s hope that information is true after all this trouble I’m going through to get there.
I have government loans called FFEL Loans with a private servicer called ECMC, a transitional servicer for those in bankruptcy. They also service other kinds of loans but have a huge bankruptcy market. So with the newly announced forgiveness I have been in contact with them and the department of Ed may times in the past few weeks. I don’t benefit from the interest and payment pause or the recently announced forgiveness because my loans are held by a commercial lender. All this time I have been in forbearance (due to chapter 13) and accruing interest that the trustee payments aren’t even covering. I owe more now than when I filed bankruptcy despite the trustee sending thousands to my servicer since my confirmation. This is because of the very large balance on my loans. My lawyer said this is very unusual and that we need to find a way to get me some relief.
Just to be clear, they are government loans, it’s just how they did things prior to 2010 and I graduated in 2005. Now the dept of ed services these loans themselves with other lenders they manage and they are called direct loans. It was recommended by the department of ed reps and my servicer that I consolidate my loans in to a direct loan to take advantage of these recent benefits. I wish I knew that when the payment and interest pause were first announced, I would have been so much closer to paying off my loans by now. Anyway, consolidating again has it’s drawbacks. I only have 13 years left on my loan ( I did a 30 year consolidation on them last time 😳) and with my balance my loans will now not be paid off for another 25 years unless I make extra payments or qualify for an income driven repayment plan. If I qualify for that will depend on Biden’s newly announced plan that goes into effect in the future and my income when my payments restart. With the current IDR I would not qualify for more forgiveness and would end up paying A LOT of additional interest on this new 25 year loan. UGH. Also, my interest rate will go up slightly. It comes down to choosing whether or not the 20k forgiveness offsets these factors and for me I believe it does.
I did a lot of investigating I was told that I should be able to consolidate my loans in to one direct loan (I have 2 consolidation loans currently) and I went ahead and applied this week. I did get approval from my attorney to proceed, she feels that the trustee will approve when she presents my case and the circumstances. The dept of ed and the new servicer (Aidvantage) told me before I proceeded that after you fill out your application they send you a notice if the loans are eligible. You have 10 days to stop the consolidation if you like, then they go though. The plan is that once they are consolidated I will get the payment and interest pause benefit until 12/31/22 and I am eligible for 20k of loan forgiveness. When payments resume I then will apply for forbearance while I’m in my 13 and my trustee will be paying enough to cover my interest now that my balance is 20k less. It just happens to work out that way. The dept of ed are actually the ones who helped me sort this all out and come up with this plan. Surprisingly they have been very knowledgeable and helpful regarding my situation. I highly recommend the chat feature, they are very prompt and you have a transcript you can download to refer back to.
I won’t go in to my feelings on student loan debt and the system as a whole again as I have posted on that before. I am very thankful that I may get some relief, I was in such distress watching my loan balance climb during my chapter 13. I really hope this all works out or I’m back in the hole and not sure how to proceed. That remains to be seen in the next month or so once the new servicer reviews my application and decides if they can take them. I wish the process, loan types, and repayment options were far less complicated and that the cost of school is better controlled. This feels like a part time job sorting this all out and being on the phone daily with the dept of ed and my servicer. I really hope all of us with student loans benefit from this and it helps us make a fresh new start when our bankruptcies are over.
First and foremost, the dept of ed has advised me that as long as I have an eligible federal loan I should be eligible for forgiveness even if I’m in a chapter 13. Let’s hope that information is true after all this trouble I’m going through to get there.
I have government loans called FFEL Loans with a private servicer called ECMC, a transitional servicer for those in bankruptcy. They also service other kinds of loans but have a huge bankruptcy market. So with the newly announced forgiveness I have been in contact with them and the department of Ed may times in the past few weeks. I don’t benefit from the interest and payment pause or the recently announced forgiveness because my loans are held by a commercial lender. All this time I have been in forbearance (due to chapter 13) and accruing interest that the trustee payments aren’t even covering. I owe more now than when I filed bankruptcy despite the trustee sending thousands to my servicer since my confirmation. This is because of the very large balance on my loans. My lawyer said this is very unusual and that we need to find a way to get me some relief.
Just to be clear, they are government loans, it’s just how they did things prior to 2010 and I graduated in 2005. Now the dept of ed services these loans themselves with other lenders they manage and they are called direct loans. It was recommended by the department of ed reps and my servicer that I consolidate my loans in to a direct loan to take advantage of these recent benefits. I wish I knew that when the payment and interest pause were first announced, I would have been so much closer to paying off my loans by now. Anyway, consolidating again has it’s drawbacks. I only have 13 years left on my loan ( I did a 30 year consolidation on them last time 😳) and with my balance my loans will now not be paid off for another 25 years unless I make extra payments or qualify for an income driven repayment plan. If I qualify for that will depend on Biden’s newly announced plan that goes into effect in the future and my income when my payments restart. With the current IDR I would not qualify for more forgiveness and would end up paying A LOT of additional interest on this new 25 year loan. UGH. Also, my interest rate will go up slightly. It comes down to choosing whether or not the 20k forgiveness offsets these factors and for me I believe it does.
I did a lot of investigating I was told that I should be able to consolidate my loans in to one direct loan (I have 2 consolidation loans currently) and I went ahead and applied this week. I did get approval from my attorney to proceed, she feels that the trustee will approve when she presents my case and the circumstances. The dept of ed and the new servicer (Aidvantage) told me before I proceeded that after you fill out your application they send you a notice if the loans are eligible. You have 10 days to stop the consolidation if you like, then they go though. The plan is that once they are consolidated I will get the payment and interest pause benefit until 12/31/22 and I am eligible for 20k of loan forgiveness. When payments resume I then will apply for forbearance while I’m in my 13 and my trustee will be paying enough to cover my interest now that my balance is 20k less. It just happens to work out that way. The dept of ed are actually the ones who helped me sort this all out and come up with this plan. Surprisingly they have been very knowledgeable and helpful regarding my situation. I highly recommend the chat feature, they are very prompt and you have a transcript you can download to refer back to.
I won’t go in to my feelings on student loan debt and the system as a whole again as I have posted on that before. I am very thankful that I may get some relief, I was in such distress watching my loan balance climb during my chapter 13. I really hope this all works out or I’m back in the hole and not sure how to proceed. That remains to be seen in the next month or so once the new servicer reviews my application and decides if they can take them. I wish the process, loan types, and repayment options were far less complicated and that the cost of school is better controlled. This feels like a part time job sorting this all out and being on the phone daily with the dept of ed and my servicer. I really hope all of us with student loans benefit from this and it helps us make a fresh new start when our bankruptcies are over.
Bankruptcy Wizard
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