The Consumer Financial Protection Bureau is once again singling out for criticism companies that service student loans. According to the CFPB, servicing companies are not doing enough to help borrowers who are having difficulty repaying what they owe.
Whether because of unexpected life changes or the effects of a struggling economy on wages and the job market, at least 25 percent of student loans are in default. Although there are programs available to assist borrowers, servicers do not appear to be doing a good job directing them to a plan that would provide them with manageable payments.
Because student loan debt cannot usually be discharged in a Chapter 7 bankruptcy or in a Chapter 13 bankruptcy, the federal government began rolling out various repayment programs to assist borrowers facing financial challenges. Critics of the programs claim that their complexity makes it difficult for most borrowers to understand and take advantage of them without assistance from loan service companies.
The federal government is looking into ways increase the number of students enrolled in repayment plans. One suggestion is to offer incentives to loan servicing companies who assist student loan borrowers who are struggling with their payments.
Individuals struggling with financial challenges such as unemployment, divorce, serious illness or other unexpected life changes may find answers by consulting with a Louisville, Kentucky, bankruptcy law attorney. An attorney might be in a position to recommend options that could stop repossession and stop foreclosure. Even in situations in which personal bankruptcy might not be able to eliminate debt attributable to student loans, manageable payments might be achieved for a person by getting other forms of debt under control.
Source: Lexington Herald-Leader, “Student loan borrowers face too many repayment hurdles, feds say,” Ali Montag, Oct 14, 2015