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Is there any way to discharge a student loan I took out for my daughter?

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  • Is there any way to discharge a student loan I took out for my daughter?

    I filed CH7 and it was discharged 2 years ago.
    The student loan taken out in my name, for my daughter education, was included in the BK7 filing but obviously not discharged.
    I have continued paying on that loan for 2 years.
    The economy being what it is, my daughter is unable to find work that pays enuf to take over the student loan payment.
    What happens if I default on the loan ?
    I know my credit will be thashed - it already is ........
    Can the Dept. of Education sue me and/or garnish my wages ?
    Any suggestions on negotiating the balance and/or interest rate down ?
    Thanks for responding.

  • #2
    Hi yomann:

    I moved your post from the end of that very old thread into a new thread of its own. It will get more attention that way.

    I am sorry to say that as of this time, I know of no solutions for your situation. Perhaps one of our other posters who are more savvy in the student loan area can give some suggestions.

    My very best.
    "To go bravely forward is to invite a miracle."

    "Worry is the darkroom where negatives are formed."

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    • #3
      Thanks for your help Angelinacat !

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      • #4
        Is this a federal loan? If it is a federal loan, you have a variety of payment plans available to you with the new income based repayment system. Some of those payment plans may give you a payment of close to 0 if you are experiencing difficulties paying due to your income. You should contact your lender and tell them you want to learn about your payment options, including Income Based Repayment.

        If it's a federal loan and you default, they can garnish your wages without even getting a judgment. I would advise against default if it's a federal loan, especially with Income Based Repayment there to help you. If it's a private loan, defaulting will be like defaulting on a credit card. They'll have to sue you if they want to take any of your wages or assets. The only difference is that you can't discharge them in bankruptcy absent truly exceptional circumstances.

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        • #5
          You can put the loan in forebearance for a year if it is Fed. If you are totally disabled (Not able to do any work at all) you can apply to have the loan discharged.

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          • #6
            Yes, you can discharge the student loan if you can prove the loan causes you an undue hardship. (e.g. that there is no way you can make any payments to the student loan and maintain a basic level of existence).

            Hate to say it, but short answer, your screwed.

            Big picture, you can try the various forbearance and deferment routes, but that only buys time. Yes, the DOE can come after and they will. Mostly likely intercept tax refunds and eventually garnish wages.
            As for strategy, short of becoming a citizen of Canada, and if you cannot afford the payments, your best option is to file chapter 13 bankruptcy. The loans tend to go to sleep because of the prolonged BK status. A chapter 13 will not discharge the student loans (unless you file an adversary proceeding for undue hardship). But a chapter 13 buys you 5 years and then hopefully your daughter will be able to pay her own debt by then.
            Last edited by HHM; 05-15-2012, 06:36 PM.

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            • #7
              Best option is to make payment arrangements that will allow you to make the smallest payments possible, so that you can "survive" and buy you the necessary time to pass the loan to your child as soon as he or she is capable of paying for the entire loan or a portion of the loan themselves. Defaulting on a federal loan is no go.
              The information provided is not, and should not be considered legal advice. All information provided is only informational and should be verified by a law practioner whenever possible. When confronted with legal issues contact an experienced attorney in your state who specializes in the area of law most directly called into question by your particular situation.

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              • #8
                Thanks everyone for your answers and valuable information.

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                • #9
                  The moral of this sad story is to never, never, ever, NOT EVER, co-sign a loan for ANYTHING--especially student loans--for ANYONE--no matter who the person is.

                  Then after that, just do NOT EVER co-sign a loan for anything for anyone.
                  "To go bravely forward is to invite a miracle."

                  "Worry is the darkroom where negatives are formed."

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                  • #10
                    It depends on what kind of loan is this. Discharging student loans in a bankruptcy filing is next to impossible. To be able and include them when filing bankruptcy, one has to show that they will never have the ability to repay them.HRx is true that Best option is to make payment arrangements that will allow you to make the smallest payments possible

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                    • #11
                      Originally posted by lindadale View Post
                      It depends on what kind of loan is this. Discharging student loans in a bankruptcy filing is next to impossible. To be able and include them when filing bankruptcy, one has to show that they will never have the ability to repay them.HRx is true that Best option is to make payment arrangements that will allow you to make the smallest payments possible
                      And not only that - if there is a cosigner, ALL need to show that they do not have the ability to repay the loans.

                      Really, student loans are like Plutonium!

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                      • #12
                        If the loan is federally guaranteed, you can't discharge it in bankruptcy. If it is not, you can. There are a variety of repayment options available though.

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                        • #13
                          Originally posted by BShop View Post
                          If the loan is federally guaranteed, you can't discharge it in bankruptcy. If it is not, you can. There are a variety of repayment options available though.
                          The part about being able to discharge loans that are not federally guaranteed, backed or issued, is not a accurate statement. With the changes to the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) you cannot discharge ANY loan that is considered an educational benefit. it doesn't matter if it's federally backed or not. (See 11 USC 523 (8))

                          It pretty much covers just about anything including
                          11 USC 523 (8)

                          (A)(i) an educational benefit overpayment or loan made, insured, or guaranteed by a governmental unit, or made under any program funded in whole or in part by a governmental unit or nonprofit institution; or

                          (A)(ii) an obligation to repay funds received as an educational benefit, scholarship, or stipend; or

                          (B) any other educational loan that is a qualified education loan, as defined in section 221(d)(1) of the Internal Revenue Code of 1986, incurred by a debtor who is an individual;
                          I think that people often forget that there is a part (ii) to the first exception for governmental "backed" loans. However, that also includes loans from any "not for profit" institution -- which most are. Part (ii) includes any obligation of funds whether scholarship, stipend, or education loan! The second paragraph (B) even further defines additional loans based on the IRS code.

                          The ability to discharge is solely based on ability to repay in the future, and they are discharged far and very very few in between.
                          Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
                          Status: (Auto) Discharged and Closed! 5/10
                          Visit My BKForum Blog: justbroke's Blog


                          I am not an attorney. Any advice provided is not legal advice.

                          Comment


                          • #14
                            You must repay your loans even if you don’t complete your education, can’t find a job related to your program of study, or are unhappy with the education you paid for with your loan. However, certain circumstances might lead to your loans being forgiven, canceled, or discharged.
                            Here is the link that may be answer to your query.
                            studentaid.ed.gov/repay-loans/forgiveness-cancellation

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