Here is another in my ongoing look at student loans eliminated in bankruptcy.
The debtor who filed bankruptcy in this case was a State employee who was making about $30,000 a year. The debtor had both federal and private student loans. The private student loan balance was $55,920 that required a payment of about $459 a month.
Navient agreed to reduce the loan balance from $55,920 to $15,000 at a fixed interest rate of 2% for 20 years. The payment was reduced to $75.88 per month.
While this is not an example of a total discharge in bankruptcy, it is an example of a significant reduction in the amount owed by using a bankruptcy filing to negotiate better terms.
The federal loans included in the bankruptcy filing were dismissed from the case but there is no indication if the government agreed to a low or no dollar monthly Income Based Repayment Plan payment. That would be the logical assumption.
In addition, the debtor is a State employee and may be eligible for the Public Service Loan Forgiveness Program to eliminate his federal loans in the future if he continues the employment.
This case was handled by:
Eric C. Redman
Redman Ludwig, P.C.
151 N. Delaware Street, #1106
Indianapolis, IN 46204
Phone: (317) 685-2426
Fax: (317) 636-8686
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