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Filed bankruptcy on student loans

Date: Mon, 10/29/2007 - 08:00

Submitted by anonymous
on Mon, 10/29/2007 - 08:00

Posts: 202330 Credits: [Donate]

Total Replies: 20

Filed bankruptcy on student loans


I recently filed bankruptcy on my credit cards and the trustee saw where every penny was going and noticed that I had 49,000.00 (25,000 interest only) in student loans declared as well. He was like, "You have nothing left to pay your student loans back with!!!" I said, "exactly". My case is under review for discharging my student loans as well!!!! This will so be a blessing!!! I will keep you upda.ted.


It won't happen. In order to file BK on student loans you have to show extreme financial hardship and there is a seperate hearing involved. If you are working or are capable of working, they will not be discharged. The trustees comment really means nothing.

If you have not consolidated with the Direct Loan program under the Income Contingent Repayment plan, you should do so once your BK has been discharged. It makes the payment affordable.


lrhall41

Submitted by SOAPLADY on Mon, 10/29/2007 - 08:48

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A lot of attorneys have no clue on student loan BK filings....they are so specialized. Even back pre 1999 attorneys had no clue on how the 5 or 7 year rule worked. When I was collecting, I had one debtor BK on her student loan only. $80k. However her attorney filed her BK 3 days too early. BK went thru but her student loan was NOT discharged. She filed BK for nothing!


lrhall41

Submitted by SOAPLADY on Mon, 10/29/2007 - 09:05

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Student loans CAN be dischared if there is proven hardship. Our lawyer told me at first that student loans would not be discharged and did not discuss the financial hardship with me...until he saw that it will place us in extreme financial hardship.

Then, wheels started turning quickly in my favor to dismiss my student loans on extreme hardship. Yes, it has happened before and it is up to the Judge to approve or deny when my case is brought before him.

I will keep you all updated!!!!


lrhall41

Submitted by anonymous on Mon, 10/29/2007 - 10:38

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"being able to work" does not exclude your from extreme financial hardship. I have not paid on my student loans in over ten years, I have no money out of our budget to pay on my student loans, which is extreme financial hardship. It is pay for housing ( a roof over my childrens head and food) or pay student loans. Naturally my children will come first and foremost before any student loan, I can't wait for my discharge papers.


lrhall41

Submitted by anonymous on Mon, 10/29/2007 - 10:46

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If you have not paid on your student loan in over 10 years, you will not meet the 3 criteria required to discharge a loan.

This is from the DOE site...

Quote:

1. That the debtor cannot both repay the student loan and maintain a minimal standard of living based on current income and expenses.

The first element of the standard usually involves evaluating what the monthly payment would be under Income Contingent Repayment, as opposed to standard ten-year repayment. Note that if the borrower has multiple student loans and could afford to repay some but not all of them, the court will generally discharge only those loans that exceed the borrower's ability to repay.
(What is important to note on this is under income contingent repayment, it is not uncommon for people with low incomes to be assigned zero to say, $25/month. It is difficult to prove to the government that you cannot afford a "zero" payment, which would count towards your repayment period. Your income would be evaluated over the 25 year repayment period. Believer me, I saw hundreds of individuals in your position while I was collecting....none where discharged because they either didnt meet all three criteria. It is not just a matter of the judge saying you cannot pay...the DOE will be involved too and they will automatically argue that did not make a good faith attempt or that you can afford income contingent repayment.)


2. That this situation is likely to persist for a significant portion of the repayment period of the student loans.
The second element of the standard requires the debtor to provide evidence of additional exceptional circumstances that are strongly suggestive of a continuing insurmountable inability to repay, such as being disabled or having a disabled dependent. A serious physical or mental illness might also qualify. The court also cited the debtor's failure to take advantage of forbearances and deferments. An inability to work in one's chosen profession does not necessarily preclude being able to work in another field.

(They also look at children growing up and leaving home.)

(This step involves looking at your earning potential over the life of the loan. They also look at children growing up and leaving home, day care expenses going away and the general expenses of supporting dependants. They do not evaluate you abiltiy to pay on a "snapshot" of where you are today. They will look at your earning potential 20 years from now.)

3. That the debtor has made good faith efforts to repay the loans. (From the cases I have read, they look at the previous 5 years. This point is usually the downfall of most BK filings.)


lrhall41

Submitted by SOAPLADY on Tue, 10/30/2007 - 05:57

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I have a student loan. Have had it for a while...8 years, or so. Had to 'deferr' it a few times. But...it's NOT in default. i don't think you can file BK with a student loan. I know in the state of Kentucky and Pennsylvania you can't. I know the % can be crazy.


lrhall41

Submitted by sdchargers_63 on Mon, 01/07/2008 - 18:50

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Depends on the disability and if it got significantly worse. HOWEVER, I heard of students that borrowed with significant disabilities like CP and MD...already wheel chair bound and not likely to work even with an education. The case I worked on the student was advised the rules and regs...he could not walk, speak and used a pointer board. Taped all his lectures. He tried to discharge and was denied.

Then I had the deaf woman who tried to discharge...she studied education at the deaf university out east. Of course she was not discharged.


lrhall41

Submitted by SOAPLADY on Sat, 01/19/2008 - 20:36

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Yes, this was a very interesting read. I filed for bankruptcy and the only thing it did to my student loans was put them on pause while the whole thing was going on. It was nice, and because I got used to not paying it, I quickly began using forbearance.

However one of my loans, stated that you are only allowed 1 year total of forbearance throughout the life of the loan. So now that I've used it up I guess I have to start paying it back.

And I don't understand how you can get away with not paying it for 10 years, wouldn't they have garnished your wages by then or something?


lrhall41

Submitted by pokogeo on Wed, 01/23/2008 - 13:54

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It is very simple to get years and years of deferments and forebearances. You can get 3 years unemployment, then 3 years of economic hardship deferment, then you can throw in a little forebearance. Consolidate your loans and repeat.

I saw many students abusing the economic deferment when I was collecting. They would buy a home, and car and then be left with no money to pay their loans and would default!


lrhall41

Submitted by SOAPLADY on Wed, 01/23/2008 - 15:59

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