Basically, the forgiveness of a student loan is the process by which the person stops paying the loan without being charged a fine. Whether you have made the payments or not, you are freed from the payment of the rest of the loan and you go on to owe nothing. This is not the same as bankruptcy, since the forgiveness of the loan has no impact on your credit rating. He simply does not have to pay what he owed.
However, student loans are only forgiven in certain situations, so you should know what those situations are to determine if you are eligible to apply for forgiveness and what legal steps you must follow to file that application. Some of the most frequent reasons for which a debt is forgiven are:
- If the school itself is forced to close.
- If you suffer a “total and permanent disability.”
- If he served publicly with groups such as the Peace Corps or the United States Army.
- And more.
Withdrawal of a loan after his death
If you die after taking a federal loan, you will automatically be discharged. You do not have to worry about the debt being transferred to your family members. The gray area is when you have Parent PLUS loans, which are signed by you and your parents. While these loans are sometimes forgiven after the death of the student or parents, this does not always happen.
Another aspect to highlight about Parent PLUS loans is that the IRS (Internal Revenue Service) may continue to claim your loan taxes, even if the loan has been forgiven. They will not claim taxes on a standard loan, so the family does not have to worry about paying if the borrower dies on a typical federal loan. As for the Parent PLUS variety, there is no guarantee that the IRS will try to collect the taxes, anyway, because in fact it has the option, and it has happened before.
Forgiveness of a loan in case of bankruptcy
This is another deceptive area. In many cases, asking to have your loans forgiven when you file for bankruptcy will not get you anywhere. As a rule of thumb, bankruptcy does not apply to student loans, but they remain in effect even when the rest of the bankruptcy proceeds as planned.
However, you can ask the bankruptcy court, in a separate proceeding known as litigation, to consider waiving student debt as well. You have to prove that the situation you are in is abnormal and that the loans are putting too much pressure on you and your family given these unforeseen circumstances.
For example, the court may want to know what their standard of living is while paying the loans. If you do not have the financial capacity to provide a minimum standard of living for your children, you may be able to apply for bankruptcy to student loans. This is done so that the loans do not make it impossible for parents to offer food, clothing and other things to their children.
However, if you cancel, but simply want a higher standard of living, with more items that the court considers frivolous, you may be denied. Each case is analyzed individually, so this is not an automatic way to cancel loans, but an option that you should be aware of.
Your path to the forgiveness of a loan
As you can see, there are several ways to address the forgiveness of a student loan, whether based on the actions you take, such as serving in the Peace Corps, or in circumstances beyond your control, such as loss. of employment that leads to bankruptcy. No matter what your situation is, make sure you know the options you have to take the appropriate legal steps.
Speak Today with a Qualified Bankruptcy PG Finance
This article aims to be useful and informative. But legal issues can be complicated and stressful. A bankrupt PG Finance can meet your particular legal needs, explain the law and represent you in court. Take the first step now and contact a qualified bankrupt PG Finance near you to discuss your specific legal situation.