MANAGING YOUR FINANCES AFTER LAW SCHOOL

A loan that is being repaid becomes delinquent whenever a borrower fails to make a scheduled payment by the due date or fails to comply with other terms of the promissory note. The lender may file a default claim with a guarantor of the loan once the delinquency has continued for 270 days.

If you are having trouble making your education loan payments, call your lender immediately. Do not be embarrassed to ask for help.

Ask for a deferment; if ineligible, ask for a forbearance.

Don't assume that your Federal education loans will be written off - they rarely are.

If you fail to resolve your payment problems, you could incur additional costs and ultimately suffer the serious consequences of loan default.

Those consequences may be as follows:

• Default is reported to all three major credit bureaus which adversely affects your credit
• Loans may be sent to a collection agency, resulting in additional collection costs
• Federal and State income tax refunds may be seized
• You may be sued and charged attorney fees and the costs associated with collecting the debt
• Your admission to the Bar may be jeopardized.

Loan Repayment Rehabilitation:

Rehabilitation is a process by which a borrower may bring a Federal loan out of default by complying with specific Federal requirements.

You must request rehabilitation.

You must then make nine on-time monthly payments in an amount determined by the lender.

Once the required payments are made, you will receive a Rehabilitation Agreement from the guarantor which you must fill out, sign and return in order to complete the rehabilitation program.

Rehabilitation procedures may vary from lender to lender, so check with your lender/servicer for specific rehabilitation procedures.

Budgeting - How to Live while Repaying Your Law School Loans:

Some basic things you should be doing include:

• Pay attention to the benefits your employer offers - those benefits usually add up to 25 - 40% of your total compensation package.
  Retirement plans, healthcare are the most obvious ones. But there might other be perks to consider: company car, life insurance, company dining room, flexible spending accounts, day care facilities available and low cost.
• Create a budget. List all non-discretionary expenses, ordered by importance and frequency Expenses should include: rent (or mortgage), transportation, insurance (if you buy it), clothing needs, food, loan repayments, medical expenses, and savings.
  List monthly take-home pay and any other ongoing income
  Subtract to see where you come out.
• Continue to live a bit like a student - don't go wild the minute you start getting a real paycheck. Keep your priorities straight. You will have more expenses, in keeping with your new status of employed, but you need to pay off your loans before you start spending beyond your means! Remember the difference between needs and wants when it comes to spending money.
• In developing a budget and using a budget worksheet, we emphasize savings even though you may think you can't save until your loans are repaid, or that is it way too early to think about retirement savings. The old adage "Pay yourself first" is good advice.
• Get into the habit of saving something every single pay period. Many of you will be able to do that through your company's or firm's retirement plan. Don't put it off till you are older. Even if you save $50 a month while paying off your loans, it is important because of compound interest and because it establishes a good habit.
• Never ignore your debts, whether they be the repayment of loans or paying credit card bills. If you get behind, contact your lender or the creditor and try to work out a manageable payment or repayment schedule. They would rather work with you than put you into collection.
• Closely monitor expenses for a year, or at least ½ a year by writing own everything you spend; it's a pain, but it is a very good exercise and you will be surprised at how you actually spend your money! 

 Monthly Budget Worksheet