Student Loan Debt - Relief Options
Student Loan debt can be an economic anchor around one’s neck that never seems to get lighter or ever go away. If you would like to lighten the load and even unshackle that anchor from around your neck then read on for some practical student loan debt relief remedies.
Negotiation
This is fairly standard across all debt categories. You can do this solo or through a debt settlement firm (also called debt resolution, debt negotiation and debt reduction).
Step 1 – Sign a contract with a debt settlement firm (if you don’t want to negotiate on your own behalf).
Step 2 – Stop paying the creditor(s) that you want to negotiate with.
Step 3 – WAIT…wait some more… Creditors have no incentive to negotiate with you if you are current with all of your payments. You want the creditor to think that they will not receive any more payments from you EVER. This may take several months depending on the creditor’s pain threshold and internal procedures.
Step 4 – If you are using a debt settlement firm, then you will be sending the debt settlement firm (every month) the payments that you normally would have sent your creditor(s). The debt settlement firm uses the payments you send to them for both their own fee and to build up a fund that will be used to pay the creditor(s) once a settlement has been negotiated.
Step 5 – Continue to WAIT… until your initial creditor(s) sell your debt to third party debt collector(s).
Step 6 – You or your debt settlement firm will reach out by phone, to the third party debt collector(s) who now own your debt, and begin the negotiating process. This process may take days, weeks or months depending on the debt collector(s) sense of urgency and procedures.
Typical debt settlements range from 25% to 65% of the outstanding debt balance(s). So if you owe $50,000, then you can expect to pay a lump sum of between $12,500 and $32,500 to your Student Loan creditor.
Bankruptcy
Contrary to the popular narrative that one cannot discharge a Student Loan debt in a bankruptcy proceeding, the U.S. Bankruptcy Code 11 U.S.C. § 523(a)(8) provides some exceptions for “undue hardship”. There are a lot of moving parts; serious consequences (forced sale of non-essential assets, 7 or 10 year credit score degradation), that will impact your finances and assets; additional filings; difficulties in proving “undue hardship”; and many hard choices to be made when undertaking a bankruptcy proceeding with the view to discharging your Student Loan debt. Bankruptcy court (and court solutions in general) should be your last resort.
If you are already engaged in a bankruptcy proceeding and want to file an Adversary Proceeding for your student loan debt within the bankruptcy proceeding then you should understand the complexity, small chance of success and the additional costs that you will incur. Here is an article that explains the U.S. Bankruptcy Code exceptions, the difficulty in proving undue hardship and the overall costs of using the bankruptcy courts to discharge Student Loan debt: Student Loans and Bankruptcy .
Commercial Discharge
Do you want to eliminate your outstanding Student Loan balance (both principal and interest)?
Do you want to avoid long and costly court proceedings?
Do you want the certainty that your Student Loan debt is settled and that your assets, bank accounts, paychecks and tax refunds are protected from Student Loan creditors and third party debt collectors?
If so, then a commercial discharge is the remedy you are looking for. Here is how it works:
Step 1 – Mindset / Knowledge – “Every effect has a cause. Every cause starts with a thought. Remedy starts by changing your thinking” states the author of Creditors and Their Bonds.
When we take out a student loan, finance a purchase, sign a mortgage, etc. we are told that the result is that we have incurred a debt and that we are a debtor. What if I told you that the opposite is true and that we are in fact the creditor?
Let me explain: For every debt there must be an equal and opposite credit to balance it out on the other side. Where does that credit come from? The story we are told is that the bank or financing company has an inventory of assets which they derive their credit from and from this credit they make loans which becomes debt that the counterparty (debtor) owes.
What if I told you that the credit does not reside with the banks or financial firms but with you because you are the creditor. In January of 1934, Franklin D. Roosevelt signed The Gold Act of 1934 into law. The act transferred ownership of all monetary gold in the United States to the US Treasury. Sections 5 and 6 of the act prohibited the Treasury and financial institutions from redeeming dollars for gold. In one stroke of the pen, the dollar (Federal Reserve Notes) went from being backed by, and convertible into gold, to being back by the “full faith and credit of the UNITED STATES.
So the UNITED STATES, a commercial entity, gave the Federal Reserve (a private international banking entity) the right to issue and print debt (promissory notes known as Federal Reserve Notes) and use Treasury1 Notes, Bonds and Bills as collateral for the debt notes that they issue. All of these Notes, Bonds, Bills etc. are just paper contract evidence of actual collateral. They are not the physical collateral itself. The physical collateral are the products, services, labor and ideas of the United States commercial entities and UNITED STATES Citizens. Since the UNITED STATES has put liens on our collateral and pledges it to the Federal Reserve, then that makes all UNITED STATES Citizens creditors of the UNITED STATES debt.
So the first action that you can take to settle your Student Loan debt is to change your mindset and realize / understand / believe that you are the creditor.
Step 2 – Utilize Your Exemption – Because the UNITED STATES has all of the gold and there is no money2 then all public debt can only be paid by the UNITED STATES. Our remedy is to offset all of our public debts utilizing our status as creditors of the UNITED STATES debt.
REKTIFIRE has been researching debt remedies for close to two decades and has implemented these well researched remedies for many years for hundreds of clients across the UNITED STATES. These remedies are customized for your particular circumstances, contracts, status and jurisdiction. They take into account what stage in the debt relationship you are in (in good standing, overdue, deferred, in collections, etc.) and address all current and future garnishments, asset confiscation, tax levy, liens or any other collection action.
1 A full list of obligation or other security of the United States can be found at 18 U.S. Code § 8 – Obligation or other security of the United States defined
2 Both the paper collateral at the Federal Reserve and the Federal Reserve Notes (Promissory Notes) are debt: promises to pay.