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AP for 220K in Private Student Loans

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  • AP for 220K in Private Student Loans


    I have about $250,000 in total student loan debt; roughly $220,000 of that is comprised of private sl debt. I'm 25 and making $50,000 annually, and I'm living in NYC. I haven't been able to afford payments and as of two weeks ago about 70k of that was charged off by chase (they refused to grant any kind of forbearance). My BK was discharged and closed in Feb, and I'll be attempting a Pro Se AP within the week.

    I'm currently readying my complaint, using those on PACER as a foundation. I will not be suing my govt loans as they offer forbearance as well as income sensitive payment plans. My circuit uses Brunner. Those of you in the know, can you please comment on my chances. Thx

  • #2
    Realistically, the status quo is "Sorry, you're screwed.". As you probably noticed, there aren't too many lawyers out there who want to touch these cases with 50 ft poles, due to the mounds of paperwork and the difficult nature of these trials.

    There is HR5043 still stuck in Congress, that theoretically would make private loans dischargable again, but seeing as Congress is not the quickest of lawmakers and Lame Duck is short, alot of us have begun to look away from the bill and now towards the judicial courts for their opinion on this mess.

    However, ultimately, it is up to you. In my opinion, if you can handle the Pro Se AP, have all your bases covered in regards to a complaint, and if you are aware that this will be a bloody, intimidating uphill battle...I say go for it.

    If it goes through, then you might have some or all of your debt written off, either in stipulation or trial. If not..well....a mountain of debt is still a mountain of debt, right? From what I'm aware...the outcome if you lose or your case is dismissed, is the same as if you never tried- eventually they will sue and garnish your wages and levy assets and so forth...

    But that's my opinion, and unfortunately I am not a lawyer, just somebody who is in a similarly screwed position like you are. If you do go through with the AP, I would be interested in knowing how it goes.


    • #3
      Since you're so young and you are over the median for the State of New York in income. You would have to absolutely prove that there is no way you can pay back the loans. That's going to be tough without some sort of medical expert testifying that you can't earn income... or someone else.

      However, you may just win on a default. I hope that you study more than just looking at complaints in PACER> You need to familiarize yourself with the FRBP, FRCP, FREv and be extremely good with local rules on filing papers (captioning, citations, etc)... so that you don't fall into the pro se trap and have a Motion for Summary Judgment filed by the defendant.

      Also, be aware that you'll have to motion the court to re-open your case for the purpose of filing a complaint to discharge student debt and that will cost you $260 (unless they waive it).

      Best of luck... we are really interested in these types of cases! Even though we may sound negative.
      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.


      • #4
        No harm in trying, but the fact that you are employable and working, is going to work against you.

        What you will need to PROVE to the court is that given your degree and education, you really cannot expect to earn more than you are earning now? That usually requires and expert witness or two.


        • #5
          And therein lies the problem. I do expect to make more; however, given the sheer magnitude of my debt, making more, even double, won't help very much.

          I've read decisions in other circuits where SLs were discharged given the magnitude of debt. Those cases, however, were decided upon the totality test. I've never read a successful Brunner case.

          But I can satisfy the 1st prong based upon my current income and expenses. The 2nd prong is trickiest. So far going to argue the following:

          1. Lack of income sensitive repayment constitues an additional circustance itself, ensuring a persistance of hardship for the life of the loans

          2. Tie prong 1 in with median income figures (NYC) for my vocation over the course of a career (highest isn't over 100k)

          3. Given current hardship (inability to pay and no assets), judgements will occur and, due to multiple lenders (4), employment would be at risk due to lack of legal protection after the 1st garnishment order


          • #6
            Sounds like a plan.

            You will need to prove #2, keep in mind that having evidence and admitting evidence in a court of law are entirely different things. Find the book, Evidentiary Foundations by Edward J. Imwinkelried


            • #7
              I wish I had that book before I started my AP, but at least the evidence that was admitted was a claim that they filed and their business records (billing). The Federal Rules of Evidence (FREv) was specifically what I was using to get an Affidavit of one creditor thrown out as hearsay. Gotta love the "games" with evidence.
              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.


              • #8
                I too, think that something to do with the lack of IBR is certainly an 'undue hardship' and 'circumstance beyond the debtor's control' ala Brunner, in the case of private loans, regardless of the median income- once defaulted on these loans, there is no way of rehabbing them out if they're in large enough amounts.

                Also, well....if life trapped in a debt spiral and persecution due to judgments generated by these loans isn't 'a hopeless situation', it doesn't make sense. Many cases involving Brunner in the past specifically state that 'these loans are not meant to make one slip into poverty', ' not meant to put somebody on the welfare rolls' heck, some courts specify a 'middle-class lifestyle' as being the definition of what life a debtor should live. Yet defaulting on them certainly might inadvertently create said situation because credit scores, background checks, and yes, multiple wage garnishments all contribute to where one trapped by these loans could find themselves at risk to be put on the unemployment rolls and other negative consequences. In particularly in our bad economy where it's taking people on average longer to find a job and many fields are overflooded with candidates from not only the US, but overseas. What a world we live in as of late.


                • #9
                  The OP's case is no different than many AP cases that have failed. The sheer amount of the loans does not constitute an undue hardship. If the OP is employed and has non-exempt salary that can be garnished in a judgment, then that constitutes an an ability to pay unfortunately.
                  You can't take a picture of this. It's already gone. ~~Nate, Six Feet Under


                  • #10

                    One quick question: my 7 was filed in Feb '10 when I was living in CT (w/ parent) and unemployed. My legal residence is CT, but I'm currently working and subletting an apt here in NYC. I'm suing in CT where I filed my 7. Haven't been able to find any research on this. Correct venue?


                    • #11
                      Yep, CT should be the correct venue because the AP, although it is a separate case from the BK, is linked to the underlying bankruptcy case. Not that big a deal anyway, worst case scenario, the case is dismissed for lack of venue and refile in NYC.
                      Last edited by HHM; 10-31-2010, 01:14 PM.


                      • #12
                        I am also a 28 year old living in NYC and have $200k+ in private student loan debt, I earn $55k per year, but I also support my mother who lives with me and doesn't have a job, I wonder if I could file an undue hardship with my situation. I haven't been able to keep up with my loan payments, due to unemployment, I only recently got a full time job, I am almost at nearing default. If they are going to garnish 25% from my salary, then I will be poor and will not be able to afford rent, I have nothing left at the end of months for savings, there is no way I can survive and support my mom while they are going to garnish from my salary...


                        • #13
                          This is a decision that is ultimately up to you, no matter what anybody else says. If you have the means to file for CH7 and the AP (there is a book published outlines how to file for the AP, this forum provides handy tips for filing for CH7 Pro Se and there may be legal clinics which can help you there if money is an issue- also members here are very useful for tips), and you have the strength to get through this uphill and very personal battle, then I encourage anybody to try it. Each of us has a unique case, so to automatically say that we are ALL going to fail is quite a hard thing to prove indeed. Despite everybody around here is either fairly neutral or negative on the nature of these cases.

                          Also I should note that in the AP process, there is mediation prior to when the case goes to trial, which could solve the loan that way if you hold strong on your strategy and don't let the attorney that was hired to represent the loan servicer get under your skin. Trial is where things tend to go wonky, as published opinions have proved.


                          • #14
                            It depends on a lot of factors. It sure sounds like you could take a shot at it, but you will need to prove that you won't likely earn too much more over the course of the next 20 years or so, then you "might" have a case.


                            • #15
                              Just out of curiousity, what were you studying that cost $250k in student loans? That seems like a pretty big number. I know education doesn't guarantee anyone a job, but for that kind of debt shouldn't you be a doctor or lawyer or something by now? Please don't take that wrong, I don't mean to sound judgmental it's actually kindofa slightly humorous (or maybe a bit irreverent) observation.
                              OK - from now on it's not a "Bankruptcy." It's a "Weight Loss Program." I'm in. Sign me up.


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