The recently passed CARES Act has provided relief for some of those struggling with student loan debt amid the coronavirus (COVID-19) pandemic. For the more than 44 million student loan borrowers carrying $1.5 trillion in outstanding debt, this relief could not come at a better time.
One of the biggest measures included in the $2.2 trillion stimulus package is the suspension of all federally owned student loan debt for at least six months until September 30, 2020. To be eligible for the suspension, you must have a direct loan or Federal Family Education Loan (FFEL) that is held by the federal government. During this time all federally backed loans are suspended, and no interest will accrue on the debt.
The CARES Act also puts an immediate stop to involuntary collections of student loan debt, including wage garnishment, tax refund offsets and Social Security garnishments. During this time, the Department of Education will report any suspended payments to credit bureaus as if they were made on-time. Therefore, those who choose to take advantage of the six-month suspension will not be penalized when it comes to their credit score.
In addition, if you are making payments towards meeting the requirements for the Public Service Loan Forgiveness program, suspended payments will still count towards these requirements. The same applies for any income-driven repayment plans.
Student loan relief under the CARES Act happens automatically, you do not have to contact your lender and request it. Borrowers with privately held Federal Family Education Loans and Perkins Loans that are not owned by the US Department of Education will not receive the payment suspension. People with private student loans from banks are also excluded from the emergency provisions as well. However, just because you are not eligible for automatic suspension of payments does not mean your lender will not work with you. Many lenders are offering three-month forbearance periods, even up to one year, with no interest during this crisis for borrowers who have been adversely affected by the COVID-19 crisis.
So many of our clients struggle with their monthly student loan payments. My law firm has successfully wiped out student loans in bankruptcy, by filing an adversary proceeding in bankruptcy court proving the undue hardship standard has been met. Call me if you are having problems paying your debts. Having debt makes you stay up at night. It stresses you out. It ruins relationships. I went through it. Boldly, I mustered up the courage to call a bankruptcy attorney and I pressed the restart button in 2008. And even though more than ten years has passed since I made that decision to restart my life, I never forgot what it did for me and how it helped me start over. Remember, we are local in your hometown. We make our hours convenient for our clients and offer free consultations on Saturdays (9:00 a.m. – 3:00 p.m.) along with our normal business hours throughout the week. Go to https://www.407bankrupt.com/ or call 407-777-7777 to set up a free virtual consultation and learn more. Because Life Has a Restart Button.