Get Out of Debt Guy - Steve Rhode

Are All Student Loan Assistance Companies a Scam?

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“Dear Steve,

I am a bankruptcy attorney and looking to provide services to those with student loan problems, as well.

You appear to believe most or all companies that help you with student loan issues are scams.

Do you think there is any student loan service that can be provided to the public that is not a scam?

I genuinely ask this question, because I am not in the business of scamming people so if there is no good benefit to provide the service, I would not want to provide it.

Justin”

Dear Justin,

This is something we were just talking about in our Bankruptcy Education Project which you might want to consider joining.

I think these two previous posts will be right on target for you.

How to Run a Clean Student Loan Assistance Program

The Ultimate Guide to Dealing With Student Loans You Can’t Afford

Interestingly enough I personally think bankruptcy attorneys are in the best position to provide student loan relief.

In my opinion the most logical approach is if the person is loaded up on other debt, then get them in a chapter 7 bankruptcy and put them in a position where they can make the regular full 10 year payment, avoid the reduced payment programs, and get these loans out of the way faster.

The bankruptcy forgiven debt is not taxed but as it stands right now, forgiven student loan debt in payment reduction program is taxed when forgiven, if the person is not insolvent.

For someone who is simply struggling making the reduced federal loan payment and has private student loans that are not willing to be flexible, then a chapter 13 for all the student loans is probably a better choice then letting them sink further.

Some bankruptcy attorneys are even doing rolling chapter 13s until the government can take action to provide people with some other relief.

In some districts, the collection fees and penalties on the private student loans are eliminated as well.

For more on this read my article over on Huffington Post.

Otherwise, you would simply be offering the person some administrative help to do what they can do already for free directly with the Department of Education.

Outside of that approach I’ve yet to see anything magical or stupendous and I admit I get frustrated when a whole lot of bankruptcy attorneys overlook the advantage of their solution even though the student loans might not be dischargeable.

Please post your responses and follow-up messages to me on this in the comments section below.

Big Hug!
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