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Disabled vets get streamlined discharges of federal student loans

On Behalf of | Aug 22, 2019 | Uncategorized

Student loans are rarely ever discharged in bankruptcy proceedings. Yet, they can still make up a significant portion of the average debtor’s mountain of unpaid bills.

Recently, media outlets reported that the President signed an executive order that streamlines the discharges of disabled veterans’ federal student loans if the vets are unable to work and repay their loans.

Mischaracterized order?

Despite the reports from some national media outlets and members of the Administration, this is not a new student loan forgiveness program. Under the Total Permanent Disability (TPD) discharge program, qualified veterans with permanent and total disabilities from service-related conditions have been eligible to wipe out their federal student loan debts without penalties.

So what did the President’s order actually do? It directed the federal Departments of Education (DoE) and Veteran’s Affairs (VA) to work in concert and streamline the TPD discharge process for the veterans who qualify.

To be sure, this is an important step, as many eligible disabled veterans remain unaware of the TPD loan discharge’s existence. The application to apply for the program has been labled both cumbersome and confusing.

Under the new order, the DoE must automatically identify the disabled veterans eligible who qualify for loan forgiveness. They will be able to opt out of the program for 60 days before the debts will be discharged automatically.

Could this keep you out of bankruptcy?

If you are a disabled veteran whose condition is service-related and you are struggling to make your student loan payments, this program could be quite helpful. Whether it will keep you out of the North Carolina bankruptcy courts is another matter entirely, however.

Most struggling debtors have more unpaid bills than just defaulted student loans. Unpaid medical debts and credit card bills typically are also part of the total debt load for those who file for Chapter 7 bankruptcy. For those debtors who have amassed a lot of debt unrelated to student loans, this program may not be sufficient to resolve all of the fiscal problems.

There is other help out there

To be clear, nobody wants to have to file for bankruptcy. But this legal process can alleviate many financial stressors in debtors’ lives. If you find yourself mired in unpaid debts, it just might be time to speak to an attorney about your options for filing for bankruptcy.


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