No. Student Loan Service is not affiliated with the Department of Education, or any academic or governmental entity. Student Loan Service is a for-profit business and all of the services provided by Student Loan Service can be performed without paid assistance if you have the time and energy to learn and complete the procedures and obtain the paperwork necessary to do so.
Can I discharge my federal student loans in a bankruptcy?
Student loans are difficult, but not impossible, to discharge in bankruptcy. To do so, you must show that payment of the debt “will impose an undue hardship on you and your dependents.”
Courts use different tests to evaluate whether a particular borrower has shown an undue hardship.
The most common test is the Brunner test which requires a showing that 1) the debtor cannot maintain, based on current income and expenses, a “minimal” standard of living for the debtor and the debtor’s dependents if forced to repay the student loans; 2) additional circumstances exist indicating that this state of affairs is likely to persist for a significant portion of the repayment period of the student loans; and 3) the debtor has made good faith efforts to repay the loans. (Brunner v. New York State Higher Educ. Servs. Corp.
831 F. 2d 395 (2d Cir. 1987). Most, but not all, courts use this test.
If you can successfully prove undue hardship, your student loan will be completely canceled. Filing for bankruptcy also automatically protects you from collection actions on all of your debts, at least until the bankruptcy case is resolved or until the creditor gets permission from the court to start collecting again.
Assuming you can discharge your student loan debt by proving hardship, bankruptcy may be a good option for you. It is a good idea to first consult with a lawyer or other professional to understand other pros and cons associated with bankruptcy. For example, a bankruptcy can remain part of your credit history for ten years. There are costs associated with filing for bankruptcy as well as a number of procedural hurdles. There are also limits on how often you can file for bankruptcy.
Are there any student loan relief options based on the current income of the borrower?
Yes, there are three income-driven options, the Pay As You Earn, Income-Contingent Repayment Plan and the Income-Based Repayment Plan. Read our eBook, “Eight Secrets Every College Graduate Should Know About Lowering Student Loan Payments,” or call us to discuss which plan may be available to you.