Between 1993 and 2005, married couples were legally allowed to consolidate their student loan debts. In 2005 the federal government stopped allowing joint consolidation loans, however, thousands of couples who have since gone through divorce have been stuck with their former spouses’ student loan debts.
The Boston Globe reported an instance where a woman consolidated her student loans with her husband’s in order to get a lower interest rate. At the time, she owed approximately $4,000 and he owed $19,000. When the couple divorced four years later, the woman was stuck with the entire joint debt that had reached over $30,000. After fighting it in court, she was told it could not be split and since her former husband did not have a job at the time, she was ultimately responsible. As a result, she lost her home to foreclosure, declared bankruptcy and had her paycheck and tax returns garnished.
Unfortunately, this is not uncommon for couples who consolidated debt during their marriage and later divorced. The U.S. Department of Education says federal law does not allow the old loans to be split, even in cases involving domestic violence. Joint borrowers also cannot apply for income-based repayment plans unless both parties submit financial information.
Borrowers facing “unique circumstances, such as domestic violence,” are encouraged to contact the Federal Student Aid Ombudsman to explore options.
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For borrowers who are struggling with student loan debt, relief options are available. Many student loan borrowers are unaware that they have rights and repayment options available to them, such as postponement of loan payments, reduction of payments or even a complete discharge of the debt. It is important you contact an experienced Miami bankruptcy attorney who can advise you of all your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade & Garcia, P.A. has been helping people from all walks of life build a better tomorrow. Our attorneys help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade & Garcia website at www.miamibankruptcy.com.