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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

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Bankruptcy Expert Claims It May Be Your Only Option if Biden’s $20K Student Loan Forgiveness Plan Fails

Bankruptcy Expert Claims It May Be Your Only Option if Biden’s K Student Loan Forgiveness Plan Fails
Bankruptcy Expert Claims It May Be Your Only Option if Biden’s K Student Loan Forgiveness Plan Fails

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President Joe Biden’s plan to forgive up to $20,000 in federal student loan debt per borrower could soon reach endgame if the U.S. Supreme Court rules against the plan this month, as many predict. If the plan is struck down, at least one legal expert says bankruptcy might be the only option for many borrowers.

Student Loan Payments: Here’s the Official Date You Need To Start Paying Again
Learn: How To Build Your Savings From Scratch

The reason is simple: Many borrowers won’t have enough funds when federal student loan payments resume sometime this summer following a pause of more than three years.

About 20% of student loan borrowers have already defaulted on a loan, according to Jonathan Petts, CEO of Upsolve, a non-profit organization that helps individuals file bankruptcy without using a private attorney. The total amount already in default is more than $124 billion.

“This demonstrates a clear need for a plan to help borrowers facing challenges with paying off their debts,” Petts told GOBankingRates in an email.

He said the Biden forgiveness plan is “likely to be struck down” by the SCOTUS, which means both loan payments and interest will resume not too long

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Warren Grills DOJ on Why It’s Still Trying to Crush Student Debtors in Bankruptcy Court

Just over a week after President Joe Biden unveiled a plan to cancel $10,000 in federal student loan debt for most borrowers and reform the income-driven repayment program, his administration on Thursday was rebuked once again for its ongoing effort to deny bankruptcy relief to some of the nation’s most hard-pressed student debtors.

“Those who continue to struggle with student debt are in need of updated undue hardship guidance.”

In a letter sent to Attorney General Merrick Garland, Sen. Elizabeth Warren (D-Mass.) asked about the status of the Department of Justice’s “work to update guidance on how it handles undue hardship claims by student borrowers in bankruptcy proceedings.”

“To support the administration’s efforts to overhaul the student loan system and ensure that bankruptcy relief is a viable option for borrowers in severe financial straits,” Warren wrote, “it is critical that you issue and implement this updated guidance without delay.”

Although Biden spent years as a senator siding with lenders and making it more difficult for Americans to reduce educational loan repayment obligations in court, he promised last year to “allow for student debt to be relieved in bankruptcy,” which would help give overwhelmed borrowers a fresh financial start.

Nevertheless,

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