Total and Permanent Disability Discharge of Federal Student Loans
One way to eliminate student loan debt is to seek a Total and Permanent Disability Discharge of Federal Student Loans. If you are unable to work, this is likely a very good option for you. All collection efforts will stop during the application process except for garnishment and offsets.
You should not be receiving any collection calls during the process and should notify your attorney if this is happening as you may be entitled to $1,000 in statutory damages and in some cases if the calls are being made to your cell phone the damages may be accruing per call at $500-1,500 per call. Remember that you need to revoke consent to call your cell phone before you would be entitled to relief under the TCPA. Contact an attorney for further information if you have questions.
Some points to remember:
First, voluntary payments are no longer required during the review process. However, wage garnishment or Treasure offsets will still occur until the application is finalized.
Second, there are essentially two ways to be approved either be submitting your Social Security Administration Disability documentation or by a physician’s certification.
It may be best to have an attorney involved for the best results to make sure the application and any follow up is done correctly.
Once a TPD application is approved, the discharge of student loan debt may be subject to a three year review and monitoring period. The debt may be reinstated if any of the following occur:
- You have actual earnings in excess of the Poverty Guideline (this is normally calculated as a family of two);
- You receive a new student loans of certain types (all Direct loans count);
- If you are disbursed a loan as described above before the TPD award, then you must return the amount within 120 days;
- If you are no longer totally and permanently disabled, or no longer on disability review per a SSA notice of award for SSDI or SSI benefits.
Additionally, during the 3 years following the discharge of your loans, you must promptly notify or respond to the Department of Education if:
- You receive employment income that exceeds the Poverty Guidelines (using a family of two);
- Your address or phone number changes;
- You must respond to any Department inquiries about employment income; or
- If you are no longer considered disabled by SSDI or SSI, or no longer under a review period you must inform the Department.
You may also receive a 1099-C for any forgiveness of debt that will be reported to the IRS and should be included as income. You may wish to consult with a tax advisor about how this may affect your personal taxes.