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Can't pay back your student loans?

Many Tennesseans grow up hearing again and again that going into debt to pay for education is "good" debt. That mantra gets said so many times by so many people, that the idea takes on the aura of accepted wisdom. But that wisdom has come under increasing assault by students who took the advice only to discover that their educational debt is not a set of wings, but rather an anchor pulling them down.

Fortunately, these individuals have some options to lessen the deleterious effects of an overpriced education. These options include deferment, forbearance, income-based repayment plans and bankruptcy.

Deferment programs allow for a person to temporarily stop paying their student loans. Sometimes these programs will allow a person to not only skip payments but also halt interest charges. But usually interest will continue to accrue. To qualify, a person will generally have to show that they are returning to school or suffering an economic hardship (such as unemployment).

Forbearance programs are similar to a deferment program, except for two things. First, forbearance is normally easier to obtain. And, second, interest will continue to accrue, which means a person will leave forbearance with a bigger debt than that with which they entered.

Income-based programs come in several forms. But they all follow a similar principle: the size of each loan repayment is tied to the size of the person's income. The less income a person has, the smaller their loan payment.

Sometimes these options are not enough; sometimes the hole is simply too deep. For these Tennesseans, another avenue is bankruptcy, including Chapter 7 and 13. To discharge student loans in bankruptcy, a person must show that the loans create a severe hardship.

Tennesseans in need of debt relief may benefit from discussing their situation with an experienced bankruptcy attorney.

Source: FindLaw, "Your Options When You Can't Repay Student Loans," Accessed April 4, 2016

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Mark T. Young & Associates
2895 Northpoint Blvd.
Hixson, TN 37343

Toll Free: 888-376-0282
Phone: 423-933-1606
Fax: 423-877-0363
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