Hardship motion for student loans?

[doc10house]

I not only had Stafford loans for college, but then had more to take me through grad school. Now, because I've had a temporary loss of license, I can't work in my field of specialty. I know I keep reading that it's almost impossible to get student loans discharged, but I'm wondering how difficult it is to file a "hardship motion" related to these, and make that happen. Because I owe almost 200000 dollars (!), and I can't come up with the thousand-plus a month they're asking for.

Thoughts?

[SinkingFast]

Hardship motions I've read about being granted were for serious health issues. And those have been few and far between. We don't have Student Loan issues to deal with but there are many others here who do, so I'm sure they'll chime in for you.

One thing I've learned about Forebearance from others who've posted on the Forum,........... When you file BK, your Student Loans will go into "Administrative Forebearance" for the duration of your BK. Because ALL Lenders are under and automatic stay during the period your BK is active. Granted you're planning on filing Ch 7, so you'll just get 90-120 days or so, but it's still something. If you were filing or wind up converting to Ch 13, the Administrative Forebearance will remain in place thruout the duration of your Ch 13 payment plan.

Administrative Forebearance time will give you some cushion time to plan. Possibly research and learn your options for applying for Hardship. Maybe renegotiate the terms of your loans.

[lrprn]

Doc10, an Indiana bankruptcy lawyer has information on his website regarding hardship discharge of student loans - http://www.indiana-bankruptcy-laws.c...udent-loan.htm . Since you are in Indiana, this will be pertinent for you.

Here's the gist...
"In most jurisdictions there is a 3 factor Brunner Bankruptcy test to see if you can discharge student loans. You almost always qualify if you are at the poverty income level of income. Here are the questions and the documents that you may be asked to provide if you want to attempt a hardship discharge. (Note: if the links to the questions and documents don't show in my post, they are live on the website itself.)

The Brunner bankruptcy test requires that first, the student loan Debtor cannot maintain, based on current income and expenses, a "minimal" standard of income for himself and his dependants if he repays the student loans. Second, that these circumstances will persist for a significant remainder of the student loan repayment period. And third, that the debtor has made a good faith effort to repay the student loans. It will often be argued that you could have consolidated you loan with the Ford Student Loan Program which bases your payments on your income and discharges your student loan upon reaching age 60 or after 20 years. You should apply to this loan prior to attempting discharge. However at some level any student loan repayment is an undue burden. HEAL student loans require a more difficult standard of shocking the consciousness."

That means if you do file Ch 7, you will need to prove all three factors. The most tricky one to show is that your lack of finances will persist for most of the length of your loans (I assume your payment length is likely somewhere between 5 and 10 years). That could be hard to prove if there's a chance your professional license will be returned during that time or if all your other debts are discharged in the Ch 7, you don't have enough then to maintain even a minimal standard of living. Also it's worth checking out the Ford Federal Direct Student Loan Program at http://www.ed.gov/offices/OSFAP/DirectLoan/index.html . Their Direct Loan Consolidation webpage is at http://loanconsolidation.ed.gov/ .

All the hardship discharge cases I can find on the web show repeatedly it is very difficult to get your student loans discharged, even when a debtor has serious medical problems that prevent working for months/years at a time. It's an uphill battle for sure. Please keep us posted on what you decide to do.

[alh]

It is possible to get these consoladated and put on an income contingent plan. That may help. You only pay a portion of your income whether that is 15 or 1500 per month. After 25 years they forgive any balance left.

[anonymuse]

Sorry for the bad news, however, I've read dozens of cases where people who I even thought would qualify for a hardship (serious illness & disability) discharge, yet most were still denied.