Having a Hard Time Paying Back Your Student Loan Debt? Check Out Income-Based Repayment.

My St. Louis bankruptcy clients are always sad to learn that Chapter 13 and Chapter 7 bankruptcy cannot discharge their student loan debt. Even after receiving a discharge of the rest of your debt, it can still be hard to come up with the monthly payments on student loans. If you cannot pay then you end up in default, and could be subject to garnishment and/or bank levy. They can even take your tax refunds!

Before you get too freaked out, you should look into Income-Based Repayment (IBR). IBR is designed to be more helpful than the older Income-Contingent Repayment Plan (ICR). IBR applies to Direct Loans and government guaranteed FFEL student loans. You cannot be in default if you want to enter IBR, but you can be eligible after bringing your student loan payments current.

To be eligible for IBR you must have a “partial financial hardship.” This means you must meet minimum income requirements to enter this repayment program. Your monthly payment can be zero, and is calculated based upon income level and family size. After 25 years in IBR, your student loan debt will be forgiven. Unfortunately, however, the forgiven amount is taxable unless you are insolvent.

If you are interested in applying for IBR you should contact your student loan servicer for an application.

*JPA