Local Bankruptcy Attorney Weighs in on Student Loan Payments Restarting | News

Options For Student Loan Repayments

UTICA, N.Y. — 40 million.

That’s the number of Americans with student loan debt.

For some, that debt is in the thousands.

For others, it could approach a quarter of a million dollars.

During the pandemic, payments were passed by both the Trump and Biden administrations.

That pause expired in August after congress passed a provision in the debt ceiling bill that said the president could not extend the pause without an act of Congress.

This meant interest restarted on loans last month, and payments this month.

It’s an issue that bankruptcy attorney David Gruenwald sees every day.

Student loan debt is a big problem, and with the push for repayment, that could put extra pressure on households.

For some, the pressure could mean making tough decision to make those payments.

But there are options available for people struggling to make payments.

The Biden Administration recently launched the save program, which reduces payments based on a person’s income.

One lesser-known option, bankruptcy.

“The thing I want people to know is that it’s not entirely true, there’s that rumor, you can’t get rid of student loan debt through bankruptcy. That’s not entirely true,” Gruenwald said. 

There are two types of bankruptcy an individual can file.

The first is Chapter 7.

“You’re in bankruptcy for about four months. The bankruptcy attorney can go to a judge and bring what is called an adversarial proceeding to attack the student loan the bankruptcy judge has the ability to reduce the student loan, and thus, reduce the payment or entirely extinguish the payment,” Gruenwald said. 

For people with a high amount of student loan debt, Gruenwald recommends Chapter 13.

“You enter into a Chapter 13 protection plan for three to five years, and we can adjust down the student loan payment. Say the student loan payment the best you can do is $1,000 a month, we can reduce that to as low as $200 a month,” Gruenwald said. 

Filing bankruptcy should only be used after all other options are tried. 

“Is bankruptcy a last resort? Certainly. Try the save program or any other governmental remedies. Doing things like that, try those first,” he said. 

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