Judgement & Student Loan Debt Hardship

If your situation demands, you can file for bankruptcy. Education loans guaranteed by the US govt. are generally not discharged in chapter 7 and 13 bankruptcies. But if the court finds that you have no means to pay the debts and will impose an undue hardship, you may qualify for it.

You have to demonstrate in front of the judge that you can't afford to pay the debts when you are filing for bankruptcy and cannot pay it in the future also. Application for the hardship discharge is not included in the standard bankruptcy fees, you will have to pay after the case is filed.

The court will conduct a test to ascertain whether you are eligible for the discharge.

Your income will be evaluated. The judge will see that if you are forced to pay the student loan, you will have no way to maintain your minimum standard of living and take care of your dependants.

The financial circumstances that satisfy the income test will continue for a long period of the repayment period.

You have to show your interests and good faith of repaying the loan prior to the bankruptcy.

You may look ahead in this direction if this option is suitable for you.

IncredibleHelp,

I filed a CH 13 in 1993 due to not having steady employment after graduation in 1991. One employer died, another went out of business and (being over 45) there was the "age discrimination" issue. Wasv even using unemployment benefits to pay the trustee, but filed for and received a hardship discharge. No one said anything aqbout having to make another court apperance to get the loans discharged because USA Funds had objected to the hardship (they weren't on the Matrix)but the judge said "sounds like a no asset situation to me. Hardship granted).

Yet now, I have Sallie Mae trying to collect, calling after being properly notified not to, and they disregard that I'm also on disability. Fortunately, I have Caller ID and refuse to answer now.

Suggestions would be appreciated. Thanks!!

JWsister..it is a bad move to ignore Sallie Mae. Have you used up all your deferments??? If they default you, your disability check can be garnished.
Yup, they can garnish disability and social security payments.

tresgodfrey...BK wont do anything for you since the courts are going to look at your earning potential over the next 25 or so years. Have you consolidated yet?? With your zero income, you are a prime candidate for the ICR payment plan with Direct Loans. You will be given a zero payment, because you have no income. Interest will continue to accrue but the loan will be current. TERI on the other hand cannot touch you without any income at this point.