A recent article reminds college students and recent graduates in Maryland that private loan lenders might target them.
Often such lenders lure borrowers with low credit scores, offering the promise of great rates for consolidation. However, when borrowers get into trouble, there may not be options available. Unlike federal educational loans, which may provide flexible terms when a borrower cannot make a scheduled payment, private lenders may impose high interest rates under harsh terms.
Under current law, private educational loan borrowers that get into serious financial debt may not find relief in bankruptcy, either. Unlike credit card debt, private student loan debit may not be dischargeable through bankruptcy. In fact, private loan industry lenders may actually have special protections from consumer bankruptcy filings.
Several members of Congress are seeking to pass new legislation aimed at providing greater consumer protections to student loan borrowers. Call the Private Student Loan Bankruptcy Fairness Act of 2013, the law would treat privately issued student loans the same as other types of private debt and consumer loans. That may allow the option of discharge, in some cases.
For Tennessee students and recent graduates struggling under private loan debt, an experienced bankruptcy attorney can explain the available options. Until the law is changed, bankruptcy may not be the best option. However, a bankruptcy attorney is also experienced in credit and debt counseling. An attorney may be able to propose a debt management program to creditors that will allow for lower monthly payments and/or interest rates until a borrower’s accounts are brought up to date.
Source: care2.com, “Take Action:Tell Your Representative: Protect Students From the Predatory Private Loan Industry,” March 1, 2013