Sometimes, for whatever the situation, it is impossible to make your student loan payment. However, student loan borrowers have options to postpone your payments and bring your account current. Remember, whatever option you decide, you should always explore and know these options before the situation is beyond reparable. In this part of our Student Loan Blog Series, Orange County bankruptcy attorneys will focus on Forbearance options at your disposal in tough financial times.
Student Loans Forbearance
Like Deferment, Forbearance is a type of postponement of your student loan payment. It resolves any delinquency on the account. If you are in the middle of an internship, do community service, or are having financial hardship, you might be qualified for forbearance. However, be aware that all loans accrue interest during forbearance. Therefore, like some deferments, it is wise to pay the interest during a period of forbearance to avoid the interest from being added to your balance when the forbearance ends.
Available Forbearances
Below are Forbearance options that may be available if you do not qualify for deferments.
Active Military Duty
This forbearance is for borrowers who are not eligible for the military deferment. To qualify for this forbearance, you must be still enrolled in school, or within six months after ceasing to be enrolled, on at least a half-time basis and a member of the National Guard (including a retired member) and performing active military state duty during a period when the governor activates National Guard personnel. The service period must begin on or after October 1, 2007, or include that date. The forbearance is granted in 12 month increments.
Corporation for National and Community Service (CNCS) Loan Repayment Program
Creditors grant this forbearance 12 months at a time. You must be performing service under the National and Community Service Trust Act of 1993 that qualifies for partial repayment of your loan. Additionally, a statement must be provided from a certifying official from the CNCS.
Department of Defense (DoD) Loan Repayment Program
if you participate in the Department of Defenses’ loan repayment program, you can request this forbearance. You must provide a statement from a DoD official stating your eligibility. Creditors grant this forbearance in 12 month increments.
Hardship
You may qualify for this forbearance if you are willing but temporarily unable to make scheduled payments and do not qualify for a deferment or other type of forbearance. Creditors grant hardship forbearances in periods of up to 12 months at a time.
Internship or Residency
During a medical or dental internship or residency, you may qualify for an internship or residency forbearance. However, an authorized official and sometimes a state licensing agency must provide a statement certifying that you are eligible and provide the begin and end dates of your residency or internship.
Bankruptcy
Bankruptcy is also an option to postpone your payments. If you file for a Chapter 7, in most cases, the student loan provider will not collect while you are in bankruptcy which can take up to six months or even longer. We will discuss the bankruptcy option in further detail in Part 8 of this series.
In addition to managing your student loan debt, you should also consider reading our blog series on credit debt. Together, you can manage all of your debts into something more manageable.