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  Dear
Dr. Don,
My bankruptcy was discharged three months ago.
I still have $50,000 in student loans that were not able to be discharged.
Even though I don't qualify for the hardship exemption, payments
for this loan total about 70 percent of my take-home pay. I have
already consolidated the loan and have almost exhausted my forbearance
time. If I were able to get a lower interest rate that would help
some, but my credit won't allow me to get a personal loan for that
much. What can I do?
Thank you,
-- Annika Agglomerate
 Dear
Annika,
Since you weren't able to get the student loans discharged when you
filed for bankruptcy, and you're near the end of the forbearance period
on the loan, then you need to restructure the loan to extend the loan
term. Personal loans aren't the answer. The answer is to change your
The Federal Student Aid Ombudsman describes five different
repayment plans on its Web
site:
An income contingent repayment plan (ICR) can give
you the flexibility you need. As discussed on the Department
of Education Web site:
This plan gives you the flexibility to meet your
Direct Loan obligations without causing undue financial hardship.
Each year, your monthly payments will be calculated on the basis
of your adjusted gross income, family size, and the total amount
of your direct loans. To participate in the ICR plan, you must
sign a form that permits the Internal Revenue Service to provide
information about your income to the U.S. Department of Education.
This information will be used to recalculate your monthly payment,
adjusted annually based on the updated information.
If your payments are not large enough to cover the
interest that has accumulated on your loans, the unpaid will be
capitalized once each year. However, capitalization will not exceed
10 percent of the original amount you owed when you entered repayment.
Interest will continue to accumulate but will no longer be capitalized.
The maximum repayment period is 25 years. If you
make payments under the standard plan or the 12-year extended
plan and then switch to the ICR plan, those periods are counted
toward your 25-year repayment period. Time spent in other plans
or in deferment or forbearance does not count toward the maximum
25 years. If you haven't fully repaid your loans after 25 years
under this plan, the unpaid portion will be discharged. You will,
however, have to pay taxes on the amount that is discharged.
Don't stick your head in the sand hoping for things
to blow over, because they won't. Work with your lender to change
your loan terms before the loan goes in to default. If problems
crop up, talk to the FSA Ombudsman to see if that office can help
you and your lender to come to terms.
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