People who have a large amount of student loans here in New Jersey are mainly seeking to do one thing: survive financially. If you went to school to get a degree (which is why you borrowed the money in the first place) you did it to have a better life, not spend it struggling under a crushing debt load.
If you have federal loans, there are strategies for getting an affordable payment plan. But what if you have a NJ state CLASS or private loan? What do you do?
If you have these loans, I would suggest you talk to a student loan lawyer about your options. There might be different things you can do depending on whether you are in default, how long that default has been in place, and whether the student loan note holders have brought suit against you.
If you are current on the loan, and have a good credit score, then perhaps a refinance of the loan, for a lower interest rate and more favorable payment terms, might be worth looking into.
If you are in default, then there is no going back to happier times, and your credit score has probably taken a hit. Thus a refinance may not be as easy a solution. Not all banks are as aggressive about collecting once you are in default, and if they do not bring suit against you for six years (and you have made no payments during that time) then they might be barred from collecting permanently by the statute of limitations.
If the original bank sold the note to a third party, there might be defenses to any lawsuit or they may not have proofs sufficient to win against you in court. Again, consulting with a student loan lawyer would be a good idea to see where you stand legally.
Then There's Bankruptcy
One last solution is to file a chapter 13 bankruptcy. Under current U.S. bankruptcy law, private student loans cannot be discharged unless you can show "undue hardship," which is a tough burden of proof. But in a chapter 13, you can propose a five year plan in which you propose to make payments on the loans.
You would still owe the rest of the balance (plus accrued interest, possibly capitalized), but the bank could not come after you with a law suit, bank levies, wage executions, and the like. Also, there are ongoing discussions in Congress about removing private student loans from the "nondischargeable" category in bankruptcy. So, after the five years are up, the law may have changed!
Certainly, a bankruptcy should be considered a last resort, and is not a solution to all of your problems. But as I stated in the beginning, people with a large debt load of student loans are looking to survive financially, and a chapter 13 could help them to do that.
So What Do I Do?
If you live in Southern New Jersey, in the Gloucester County area, and are struggling with student loan debt, call my office at 856-432-4113 or contact me through this site to schedule a consultation in my Woodbury office to discuss your case.
If you would like more information about student loans, you can dowload my free book, I Graduated; Now What? A Guide to Dealing with Your Student Loans.