To the relief of many, the federal government recently extended the pause on student loan repayment, interest, and collections through August 31, 2022. The three month extension will provide additional time for borrowers to get ready for the resumption of their payments, thereby reducing the risk of delinquency and defaults in the future. Furthermore, the plan will allow all borrowers with paused accounts to start with a clean slate – existing delinquencies and defaults will be eliminated placing borrowers in good standing when they reenter their respective repayment plans.
Along with this bit of good news, there are rumblings that student loan forgiveness may still be on the table, although what shape it takes is still unknown. Although there is not much support for forgiving all student loan debt, there is growing support to forgive up to 10K of student debt through legislation. Who that would apply to is anyone’s guess, but someone who is struggling financially would be likely be eligible if legislation passed.
A fresh start on student loan payments will help put some borrowers on the road to financial recovery, but lingering credit card debt may still be a problem for many. Someone who is experiencing financial difficulty may be a good candidate for bankruptcy protection to discharge unsecured credit card and medical debt, providing more income to target other expenses such as student loans. When you have questions regarding bankruptcy protection contact Peoria bankruptcy lawyer Charles E. Covey for immediate assistance today at 309-674-8125.
