06/03/2013 10:26 am ET Updated Dec 06, 2017

My Student Loan Debt is More Than 20 Years Old

Huffington Post Reader Question

Dear Steve,

I have an awwwwful lot of student loan debt following me from college. Unfortunately I have not been able to pay any of it back. Long story short, I ended up footing the entire bill for college because my parents were not in the picture and I had no guidance except "take out loans and pay them back later!"

I had to file bankruptcy once when I first left college to erase as many as I could but some were not old enough to be discharged..although included in the filing.

So now I have the remainder and it accrues daily ...I think its at approx 60grand! I work like a madman but I have tax debt as well that I am trying to deal there any way to reduce the amount I owe them ...who do I speak to...any advice would be greatly appreciated!

How can I reduce the amount of my student loans so that i can at least begin to make payments...or is there a way to discharge at least some of them...the loans are about twenty years old now...


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Dear David,

Since you didn't say if these loans were private or government backed student loans I'm going to give you a bit of advice for both. But also feel free to read my guide on how to deal with student loans you can't afford.

Private Student Loans

Private student loans are a bit tricky in that the lenders have no obligation or requirement to offer any adjusted payment programs.

But for old loans in default I'm seeing a trickle of more offers from private student loan holder to settle the loans for a percentage of the balance. The lowest offer I've seen was 20% of the balance but the rest seem to be in the 40% of balance range.

I have yet to see anyone successfully proactively reach out and negotiate a settlement with a lender. The letters seem to be triggered by some event and sent by the loan holders.

Again, the number of settlement offers I've seen is still small.

Many are under the misperception bankruptcy today can't help with student loans and they are wrong. Private student loans which are outside the statute of limitations can be discharged in bankruptcy still.

The other advantage of considering bankruptcy for unmanageable student loans that are threatening wage garnishment, even if the loan is not dischargeable, is because a chapter 13 bankruptcy can generally prevent that from happening and offers other advantages as well.

You can click here to find a local bankruptcy attorney and talk to them for free about your specific situation. Get the facts and then you can make an informed and educated decision if bankruptcy is right for you.

Government Subsidized Student Loans

If you are holding federal student loans then see my guide and look for the information on the income based and income contingent programs. If you are able to enroll they can give you an affordable payment and keep you out of default. And that's important because if these loans are not resolve by the time you get Social Security and they are then in default your Social Security payments can be garnished. But even then there are ways to deal with that.

And on the tax debts, if you do decide bankruptcy is an appropriate tool in your situation, IRS debts, in many situations, can be included and discharged in bankruptcy.

I hope this gets you headed in the right direction.

Before I go I wanted to leave you with three easy action items you jump on right now to address your situation. Just click here.

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