Bankruptcy Tutor
Of course, never trust what politicians say before elections ... but can you imagine how many more people will file if it becomes possible to include student loans in bankruptcy.
Joe Biden says if he’s elected president, your student loans get forgiven in bankruptcy.
Here’s what you need to know.
Student Loans
Former Vice President Biden said he would support Sen. Elizabeth Warren’s plan to discharge student loans in bankruptcy. As a presidential candidate, Biden has supported discharging student loans in bankruptcy, although as a U.S. senator, he has opposed student loan forgiveness in bankruptcy such as when he voted for the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. In a virtual town hall in Illinois Friday, Biden told voters he would support Warren’s plan, which Biden said would also widen his appeal to supporters of fellow presidential candidate, Sen. Bernie Sanders.
The Brunner Test: Financial Hardship
Traditionally, unlike mortgages or credit card debt, student loans cannot be discharged in bankruptcy. There are exceptions, however, namely if certain conditions regarding financial hardship are met. For example, a Navy veteran had $221,000 of student loans discharged in bankruptcy. Those conditions are reflected in the Brunner test, which is the legal test in all circuit courts, except the 8th circuit and 1st circuit. The 8th circuit uses a totality of circumstances, which is similar to Brunner, while the 1st circuit has yet to declare a standard.
In plain English, the Brunner standard says:
the borrower has extenuating circumstances creating a hardship;
those circumstances are likely to continue for a term of the loan; and
the borrower has made good faith attempts to repay the loan. (The borrower does not actually have to make payments, but merely attempt to make payments - such as try to find a workable payment plan.)
There are variances across federal districts, but that’s the basic framework. To discharge student loans through bankruptcy, an Adversary Proceeding (a lawsuit within bankruptcy court) must be filed, where a debtor claims that paying the student loan would create an undue hardship for the debtor.
Does This Mean Biden Supports Student Loan Forgiveness?
Unlike Sanders, who proposed forgiving all $1.6 trillion of student loan debt, Biden does not support wide-scale student loan forgiveness, but he has his own $750 billion student loan plan. Biden and Sanders both support the Public Service Loan Forgiveness program. In contrast, President Donald Trump called for the end of the Public Service Loan Forgiveness program in his annual budget in favor of a simplified income-driven repayment plan.
What Can You Do If You’re Struggling To Make Student Loan Payments?
If you’re struggling to make student loan payments, the good news is you have several options. Trump temporarily waived interest payments on federal student loans to help borrowers who will be financially impacted by the coronavirus.
Here are some action steps:
1. Income-Driven Repayment: For federal student loans, consider an income-driven repayment plan such as IBR, PAYE or REPAYE. Your payment is based on your discretionary income, family size and other factors, and you can receive student loan forgiveness after 20 or 25 years.
2. Pay Off Other Debt: Pay off credit card debt first (particularly if the interest rate is higher than your student loan interest rate). Credit card consolidation is the process of paying off your existing credit card debt with a fixed-rate personal loan at a lower interest rate.
3. Contact your lender: If you’re struggling financially due to coronavius or otherwise, contact your lender to discuss alternative payment options. Don’t wait to the last minute to address your student loan debt.
4. Refinance student loans: Student loan refinancing rates are incredibly cheap right now and start at 1.9%. The Federal Reserve cut rates again yesterday (the second time this month), which have caused student loan refinancing rates to drop near an all-time low. To qualify, you’ll need a credit score of at least 650 and enough monthly income for living expenses and debt repayment. If you don’t meet these requirements, apply with a cosigner to help you get approved and get a lower interest rate.
This student loan refinancing calculator shows how much you can save with student loan refinancing.
Joe Biden says if he’s elected president, your student loans get forgiven in bankruptcy.
Here’s what you need to know.
Student Loans
Former Vice President Biden said he would support Sen. Elizabeth Warren’s plan to discharge student loans in bankruptcy. As a presidential candidate, Biden has supported discharging student loans in bankruptcy, although as a U.S. senator, he has opposed student loan forgiveness in bankruptcy such as when he voted for the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. In a virtual town hall in Illinois Friday, Biden told voters he would support Warren’s plan, which Biden said would also widen his appeal to supporters of fellow presidential candidate, Sen. Bernie Sanders.
The Brunner Test: Financial Hardship
Traditionally, unlike mortgages or credit card debt, student loans cannot be discharged in bankruptcy. There are exceptions, however, namely if certain conditions regarding financial hardship are met. For example, a Navy veteran had $221,000 of student loans discharged in bankruptcy. Those conditions are reflected in the Brunner test, which is the legal test in all circuit courts, except the 8th circuit and 1st circuit. The 8th circuit uses a totality of circumstances, which is similar to Brunner, while the 1st circuit has yet to declare a standard.
In plain English, the Brunner standard says:
the borrower has extenuating circumstances creating a hardship;
those circumstances are likely to continue for a term of the loan; and
the borrower has made good faith attempts to repay the loan. (The borrower does not actually have to make payments, but merely attempt to make payments - such as try to find a workable payment plan.)
There are variances across federal districts, but that’s the basic framework. To discharge student loans through bankruptcy, an Adversary Proceeding (a lawsuit within bankruptcy court) must be filed, where a debtor claims that paying the student loan would create an undue hardship for the debtor.
Does This Mean Biden Supports Student Loan Forgiveness?
Unlike Sanders, who proposed forgiving all $1.6 trillion of student loan debt, Biden does not support wide-scale student loan forgiveness, but he has his own $750 billion student loan plan. Biden and Sanders both support the Public Service Loan Forgiveness program. In contrast, President Donald Trump called for the end of the Public Service Loan Forgiveness program in his annual budget in favor of a simplified income-driven repayment plan.
What Can You Do If You’re Struggling To Make Student Loan Payments?
If you’re struggling to make student loan payments, the good news is you have several options. Trump temporarily waived interest payments on federal student loans to help borrowers who will be financially impacted by the coronavirus.
Here are some action steps:
1. Income-Driven Repayment: For federal student loans, consider an income-driven repayment plan such as IBR, PAYE or REPAYE. Your payment is based on your discretionary income, family size and other factors, and you can receive student loan forgiveness after 20 or 25 years.
2. Pay Off Other Debt: Pay off credit card debt first (particularly if the interest rate is higher than your student loan interest rate). Credit card consolidation is the process of paying off your existing credit card debt with a fixed-rate personal loan at a lower interest rate.
3. Contact your lender: If you’re struggling financially due to coronavius or otherwise, contact your lender to discuss alternative payment options. Don’t wait to the last minute to address your student loan debt.
4. Refinance student loans: Student loan refinancing rates are incredibly cheap right now and start at 1.9%. The Federal Reserve cut rates again yesterday (the second time this month), which have caused student loan refinancing rates to drop near an all-time low. To qualify, you’ll need a credit score of at least 650 and enough monthly income for living expenses and debt repayment. If you don’t meet these requirements, apply with a cosigner to help you get approved and get a lower interest rate.
This student loan refinancing calculator shows how much you can save with student loan refinancing.
www.BankruptcyForum.com
Bankruptcy Tutor
before this topic gets more heated 
Comment