Resolving Student Loan Debt in Minnesota

Having a lawyer can help you through the repayment questions

By Judy Malmon, J.D. | Last updated on January 12, 2023

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It’s a modern conundrum: To make a decent living and have career advancement potential, you are virtually required to obtain a higher education degree. But paying for that education can run up debt well into six figures before you’ve even worked your first day. Student loan debt is now second only to mortgages in total debt owed nationally. With income lagging behind rising living costs, it’s not surprising that many people just can’t keep up with payment and interest rates.

Complexities of Student Loan Debt

Minneapolis consumer law attorney Todd Murray, of Friedman Iverson, helps borrowers of student loan debt issues wade through what is otherwise a complex and opaque system. “I think the hardest thing I see with clients is that this is a system that completely lacks transparency. There’s a myriad of servicers and assigners and players in the industry and it can be very difficult to figure out who has your loan, if it’s federal or private, who you talk to, and things bounce around and change all the time. One of the things I do is help people sort this out.” Murray sees a variety of issues in his practice related to student loan debt and collections, and helps clients identify strategies by piecing together their specific student loan puzzle. For example, he has seen a spike in collections on private student loans related to a specific large servicer in Minnesota, National Collegiate Student Loan Trust. Several of Murray’s Minnesotan clients have reported problems with inaccurate crediting of payments, parents listed as co-signers of loans for which they never signed any paperwork, and other origination and handling irregularities. “The problem,” says Murray, “is that because these are so old, people don’t have all the records going back decades. They may have a partial payment history, for example, but not a full payment history, to be able to point to specific payments as not being credited properly.”

What Can You Do to Resolve the Debt?

Ultimately, Murray finds that negotiating a settlement is often the best way to resolve these problems. “In the litigation realm, even though there may be legitimate procedural issues, courts here tend to view it as, you took out a loan and you’re trying to get out of paying it back.” If you’re really in dire straits and are certain that you’ll never be able to repay your student loan debt, you can, in certain circumstances, try to have the debt discharged in bankruptcy. “It’s very hard to do,” says Murray, who has taken a few of his clients through the process. “Like, if you’re 40 years old, you have to be able to say that not only can’t I pay this back now, but I won’t be able to pay it back for the next 25 years.” Essentially, this is a last resort discharge that’s reserved for people with permanent disability or other extreme circumstances. On a more optimistic note, Murray encourages people that the best way to deal with student loan debt problems is to face them head on, and to enlist the help of a lawyer to figure out and negotiate a loan repayment plan. “Knowledge is really power here. There are lots of options in terms of reasonable, affordable payment plans, deferments, forbearances, just a lengthy menu that you have if you find yourself getting into trouble. But it starts with being proactive, not burying your head in the sand. One of the worst things you can do is hope it will go away, and the longer you wait, the worse it gets.” Murray advises people to contact an attorney at the earliest possible sign of imminent trouble—before you are even behind on payments, but you’re struggling to keep up and see potential default on the horizon. “I can do a lot more to prevent problems the earlier I can step in. Unfortunately, too many people wait to talk to a lawyer until it’s pretty bad.” If you’re concerned about a student loan issue or repayment options, talk to a consumer lawyer with experience in student loan payment issues. For more information on this area of law, see our overviews of consumer law and debt collections.

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