I finished college in my 40s, but I defaulted on my student loans. How can I deal with it?

How to get out of student loan debt

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Question: I’m ready to turn 65 and I’m entitled to Medicare. I have a degree in business and organizational communications and an associate degree in marketing and sales technology. I was 40 when I graduated. My younger classmates had great jobs. I went bankrupt and my house and cars were recovered. All my questionable choices and ignorance have been looking at me since 1997. Sometimes I paid off my loans — actually most of the time — but several times I failed. Many times I put up with the hardships. My loans have all been consolidated and have gone through many companies. Recently, I was entitled to pay $ 0 through income-based repayment. The interest that has accumulated is more than double what I borrowed. COVID left me without a job. What can I do in this situation?

Answer: First of all, let’s look at what you do right, which is to get into an income-based repayment plan. When you have an inadequate repayment history that includes default, tolerances, consolidation, and multiple repayment plans, your best option is to find a program that fits your living conditions, says Anna Helhoski, a student loan specialist at NerdWallet. “Income-based repayment is the best option when you have fluctuations in income.” (Note that these income-based repayment plans are usually only available for federal loans, so you probably do not want to refinance, as this would remove this option. However, for private loan readers, refinancing may make sense. as rates are low now – you can see the lowest prices for which you can qualify here.)

“All you have to do is re-certify your income every time it changes. This can be a tedious and tedious process that you have to do more than once a year, but it is probably the best option to make sure you stay on track and out of pay, ”says Helhoski, referring to staying in a income-based repayment plan. Under these repayment plans, any remaining balance is forgiven if your federal student loans are not repaid in full at the end of the program. . For those with very low incomes, the payments can be as low as $ 0 per month and are still being calculated for the loan write-off.

Do you have a question about getting out of a student loan or other debt? Email chill@marketwatch.com.

It seems that your student loans were not repaid when you filed for bankruptcy – it is very difficult to get rid of them, say professionals – and to do so requires unjustified difficulties in a litigation process. “Unjustified difficulty is generally interpreted as meaning that you can not currently repay your student loans and maintain a minimum standard of living for you and your dependents, that this situation is likely to continue for most of life. “We’ve made a good faith effort to explore repayment options, such as income-based repayments, deferrals and tolerances,” says Mark Kantrowitz, a student loan expert and author of Who Graduates From College? Who does not ?.

It is important now to control your finances. “It’s not an overnight process,” says Grace Yung, a certified financial consultant at Midtown Financial. “To recover from bankruptcy and try to get out of debt and into financial freedom [requires a] change in your financial habits “. The National Foundation for Credit Counseling and Clearpoint offer free or low-cost credit counseling services to help people navigate personal financial matters.

And you will want to find a job if you can. Depending on your situation, there are potential job development programs that have special services for older workers. RetirementJobs.com offers job listings for people over the age of 50, and AARP has a to-do list designed to help older employees find work.

Hard work comes into play when you need to stay disciplined and apply new, healthy habits. “You have to become your new way of life in order to stay in good financial shape,” says Yung.

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