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Private student loans chp 7 discharge help

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  • Private student loans chp 7 discharge help

    I have about $110,000.00 in student loan debt. $70,000 of the student loan debt is from Chase Bank in a non government backed and non school certified loan. The other $40,000 is through AES. I didn't get these loans through my school or anything. I was wondering if my student loans since they are not school certified or government backed and were not obtained through the university if they can be discharged in bankruptcy?

    If not, with the information provided would I be eligible for hardship discharge? I work at a bank now part time making $11,000 a year only about $800 a month after taxes.

  • #2
    It is very hard to get a hardship discharge. You would need to prove that you are unable to work for the rest of your life.

    Have you spoke to Chase and AES about deferment or income based reduction in the monthly payments that are due. Normally you can defer the payments for a long time.

    Income reduction is something that many lenders can offer when you are not eligible for deferment's. I would first speak with someone to see what your options are. If you are already in default then you may want to see if they can do a wage garnishment which means they can only receive a max of 15% of your pay, as long as you make a certain percentage over min. wage. Based on what you take home each month it would not be much that they would be able to take out.
    Chapter 7 filed on 4/23/2010
    341 meeting on 5/28/2010
    Discharged on 8/19/2010

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    • #3
      School certified is a somewhat loaded term in this context, what exactly do you mean by it?

      There is no distinction in BK between private and public student loans. However, there are some administrative remedies if the school wrongly certified you as eligible for student loans.

      Bottom line, there is NO accidental discharge of student loans. Whatever your basis for discharge, YOU must file an adversary proceeding to get your student loans discharged.

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      • #4
        Student Loan Discharge?

        Just that it was not applied for or received through the school and they had no input in the amount I received.

        I was just asking because I have read in other places that as long as the loan was from a for profit company and was not associated or backed by the government or a nonprofit that it could be discharged. I got this answer from other forum and bankruptcy websites so I was just trying to get the real answer.

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        • #5
          In 2005, the bankruptcy laws were revised and private student loans were made non-dischargeable in bankruptcy.

          Question: how does one borrow 110,000 dollars in student loans without the school having anything to do with the process? Could you let us know a bit more about what happened so we can determine whether these really are student loans?

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          • #6
            I'm not sure how I did it. The 70,000 through chase was before when they had the non school certified student loan. You could borrow up to the cost of attendance but they didn't ask how much financial aid you already had so I could borrow up to 25,000 a year I believe it was because the COA of the school I go to is 46,000 a year. The other 40,000 in loans was originally through astrive student loans and their application process was the same way. I had to input my school information but that just gave me a limit I couldn't go over per year but the school didn't have to certify the amount.

            Its really complicated. I was 16 when I started college and I was on an almost full scholarship. I took out all the loans with a cosigner and I just blew all of the money and now I'm stuck basically at 20 with all of this student loan debt and other debt.

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            • #7
              If you want to read the law yourself, find 11 USC 523(a)(8) and 26 USC 221(d). Your loans fall under the statutory provisions removing student loans from bankruptcy discharge. So they cannot be discharged in bankruptcy. It also sounds like they are not federal loans and so will not be subject to income based repayment.

              Are you current on these debts, or delinquent or in default?

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              • #8
                I was in a similar boat. I have quite a few private student loans that are non certified. They are as others have said, non dischargable.

                To the person that asked about "how can you get 110k in loans without the school knowing" ... the lending laws before the economy crashing for student loans were very lax. Personally, I did non certified school loans just because it was a pain in the ass to get them certified... all this school paperwork and justification for loans and then they have to approve it and wait bla bla... the non certified loans were just easier to get. Also, I am a working adult who just happened to be going to school part time. Most of the time, I was only taking 1 class per semester and to get school certified loans you generally need to be in school at least half time.

                Today, you would not be able to get non certified loans. Most lenders have actually stopped issuing student loans.

                So, to the OP, yea it sucks... but we're stuck with them
                BK Ch 7 Discharged 09/2009 | Anything I say can and should be used as friendly advice and sharing of experiences with an unbiased viewpoint.
                Scores: EQ 745 EX 704 TU 710 as of 08/15/2012

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                • #9
                  I know this is too late but how in the world do people get into so much private student loan debt? A college degree does NOT guarantee a good income. Even with a decent income 110k in student loans is still unmanageable! My suggestion would be to move to Canada.
                  Filed: 6-7-2010 341: 7-15-2010 DISCHARGED: 9/17/2010

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                  • #10
                    Some of the universities are charging 25K for 2 semesters. That adds up very quickly. I looked into some colleges and my mouth just about dropped at the price. I could not fathom paying that much for a college tuition, because in the end it may not pay off.
                    Chapter 7 filed on 4/23/2010
                    341 meeting on 5/28/2010
                    Discharged on 8/19/2010

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                    • #11
                      Also, if loans go into default, a collection fee of 25 to 30% is added to the loan. As interest capitalizes on the added fees, etc, the loans grow quickly. My student loan debt is currently 100k, but the actual loan debt is half of that (and that was for an ivy league mba, which was worth the money spent in my opinion), the other half of that debt is collection fees, and capitalized interest for all the time I left the loans in default.
                      You can't take a picture of this. It's already gone. ~~Nate, Six Feet Under

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