October 20, 2019

Student Loan Workout Should Precede IRS Workout (Usually)

IRS monsterHow should you prioritize your payments when you have both tax debts and student loan debts? According to attorney Shawn Wright, a Pittsburgh, PA lawyer who represents clients in tax matters, student loan workouts and bankruptcy, you should apply for a student loan workout first, and thereafter apply for an offer-in-compromise or installment agreement with the IRS.

As Shawn notes, the IRS’ “Fresh Start Initiative allows taxpayers to include student loan payments as approved expenses in an IRS workout budget. This is a change from prior policy. In other words, when you apply for an IRS settlement, you have to submit a budget. The IRS will only acknowledge reasonable and necessary budget items – anything else will be considered disposable income that you can use to pay the IRS.

As of May 21, 2012, student loan expenses may be included in an IRS settlement budget. Other expenses, like credit card debts and personal loan repayments cannot be claimed at all on an IRS settlement budget. Further, the IRS limits what you can claim as “necessary” in categories such as housing, transportation and utilities. [Read more…]

Expansion of PAYE Income Based Repayment Rules Not Likely to have much Impact

PAYE rules expandedYou may have heard that on June 9, 2014, President Obama signed an executive order expanding the PAYE (Pay-As-You-Earn) program. According to the President, this action is intended to “make student debt more affordable and manageable to repay.” But will this executive order really have much impact?

The PAYE program is one of several income based repayment options available to student loan borrowers. It uses a formula whereby a student loan borrower can modify the repayment terms of his loan and pay back that loan using a payment that does not exceed 10% of the borrower’s discretionary income. After 20 years of payments, any remaining indebtedness will be forgiven.

Currently PAYE is only available to new borrowers – students who graduated prior to 2013 do not qualify. Older graduates have other loan modification options available like the income based repayment plan which is similar to PAYE but caps payments at 15% of discretionary income and forgives the balance after 25 years of payment.

Under Obama’s executive order, PAYE will be available to all student loan borrowers, not just members of the class of 2013 and future graduates. The new PAYE eligibility begins in December, 2015, so older graduates will have to wait at least a year and a half to take advantage of these new rules. [Read more…]

Student Loan Debt Settlement

You may have heard that student loan debt is impossible to deal with.  That the monthly payment set out in your statement is not negotiable and that if you don’t pay, your tax refunds will be seized, your wages garnished and your credit destroyed.
Hi, I’m Jonathan Ginsberg and for the last 25 years I have served clients as a consumer bankruptcy lawyer.  And let me tell you that very little is written about student loans in the bankruptcy world.  Ask most bankruptcy lawyers and they’ll tell you, correctly, that student loan debt cannot be discharged in bankruptcy unless you can show extreme hardship, a standard which is almost impossible to prove.  So if you call most bankruptcy lawyers and ask them “what can I do about student loans,” the answer will be – there is nothing I can do, you have to pay them.
If you stop there, however, you’re only getting half the story.  Yes, bankruptcy law is unforgiving.  However, federal laws outside of bankruptcy contains a multitude of provisions that allow you to restructure your loans to get a lower monthly payment based on your budget, and provisions that allow for partial or total forgiveness of loans.  And that’s just the beginning.
I ran a quick count and I have come up with 29 different strategies that may be available to you to decrease your payment and/or reduce your total balance.
Unfortunately, many of these borrower friendly laws are buried in the statute books and not well understood or explained.  According to government statistics, only about 2% of eligible student loan borrowers are currently taking advantage of debt reduction plans that they qualify for.  Only 2%.  That’s why I have added student loan debt settlement to my law practice and why I have created this web site.
So, if you owe money for student loans and you are unhappy with the size of your monthly payment, call me.  Even if you are in default I can probably help.  I’m attorney Jonathan Ginsberg and you can reach me at 770-393-4985 or email me using the form on this page.  I look forward to helping you eliminate the stress in your life caused by student loans.
Ginsberg Law Offices, P.C.
Federal law offers student loan borrowers many opportunities to restructure their debt and reduce monthly payments.
1854 Independence Square
Phone: 770-393-4985