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Thoughts and suggestions...

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    Thoughts and suggestions...

    Hi all,

    I'm still reading through threads to collect info, but I just wanted to put my story out there for anyone willing to give suggestions and/or advise.

    About 3 weeks ago I received a letter from a Law Firm stating this is an effort to collect a student loan debt from United Guaranty of NC. I replied with a written letter stating that I was disputing the validity because in 2013 I had filed for, and was granted, student loan discharge under the Total and Permanent Disability (TPD) Discharge process. I also asked for documentation on the origin of the loan and all sales, which I just received on 12/4.

    Prior to receiving this letter, I was under the assumption that any education debt I had was discharged when I received the TPD discharge in 2013. I even have a screenshot of checking the database, as instructed to with the TPD discharge, to make sure there were no outstanding balances. *Note – I now understand TPD has nothing to do with private student loans, but at the time I thought my loans were all federal.

    Before that, the last payment to that loan was in 07/2009 (just before I filed Ch 7 bankruptcy – filed 8/24/09, closed 12/9/09); And multiple payments in an attempted repayment plan between 2006-2007.

    Since receiving the documentation, I've done a lot of research and believe there's a very good chance the court would discharge this debt, probably under 'undue hardship' (?), based on the following information/arguments -
    1. The only 'income' I receive is SSI. At $1,100 per month for myself and 2 dependents, that's about 33% LESS than the federal poverty level. Or, in other words, I'd have to earn an additional $550 per month just to be at the 100% FPL.
    2. Having gone through and been granted the TPD Discharge should reiterate my situation. A) I provided all necessary documentation and medical opinions, and my medical history, which led to the determination that I am, and will continue to be (my condition has proven treatment-resistant), disabled, and, therefore, am eligible for discharge. B) Why should my situation be sufficient to discharge Federal student loans, but not private loans, especially considering the goal of discharge is to help relieve financial hardship, yet my private loans amounted to more than 12 times that of my federal loans (meaning they cause even more financial stress).
    3. I've read that a lot of times, a payment of 10% of a person's income is ordered. Even if I could afford it, a monthly payment of 10% of my income, and assuming 4% interest on the debt, would take about 43 years to pay off; at which point I will have paid over $51,000 total (about $27,000 in just interest) on a $24,700 debt. Any payments smaller than that, or interest rates above 4%, amount to the fact that the payments made won't even cover the interest being accumulated and, therefore, the debt will never be paid off.
    4. My income is already below the National Standards of Living ($1,249 according to 10% of my income, or about $110/mo, is equivalent to 1 week of groceries for my family of 3. That means if I were to make a $110 payment towards the debt, I would either run out of food to feed my family, or be forced to use money from other essential living expenses like personal care products or household products, etc., and risk not being able to provide proper housing.
    5. I incurred the debt under the assumption I would graduate with a BA degree in Engineering, which would allow opportunities for much higher-paying jobs (national average salary for entry-level architectural engineer = $26/hr vs. my SSI = $6.60/hr), and therefore the ability to afford future student loan payments.

    Other information:
    - I live in MN, am 30 years old
    - Because of my disability, I've struggled keeping jobs for the past 5+ years, and was approved for disability about 15 months ago
    - I have contacted the lawyer I hired in 09 for my ch 7 bankruptcy, but he quoted me an estimate of $5000 (not including court/filing fees) to reopen and ask for the discharge (plus he just seems reluctant to even want to do it), and I obviously don't have that kind of money.
    - My mom co-signed the loan, which was originally dispersed in late 2003 through CitiBank
    - I have no major assets (no car, house, etc) and have under $300 in my possession or accounts at any given time.

    So...I guess I'm looking for any info, answers, advise or suggestions about the following questions:
    1. I realize being granted 'undo hardship' isn't easy, but am I wrong in thinking the reasons I listed above give me a pretty good chance?
    2. Does my bankruptcy case have to be reopened, or is there another way to get a judge to have my private student loan discharged?
    3. Am I better off negotiating a payment plan? (Keep in mind it'd have to be an extremely low payment – literally something like $10-20/month!) Would doing this through ch 13 be an option?
    4. Any thoughts on any (or all) points of my argument.

    Thanks for reading!

    You could try negotiating with the lender, but there is no guaranty they will agree to accept payments. Your best bet is to get the loan discharged in bankruptcy court. A Chap 13 will only be helpful if you have enough interest to pay the loan off, without interest, in 5 years. If the lender won't agree to a discharge, the only way to get a discharge is in BK court. To get the discharge, you must convince the court that your disability is permanent and extensive enough to make paying the loan an undue hardship. I suggest you consult with more attorneys and see if you can find one that is a little more enthusiastic about doing the work.

    Keep in mind that getting a discharge of the debt will not get your mom off the hook. The lender will likely pursue her for payment if you get a discharge.
    LadyInTheRed is in the black!
    Filed Chap 13 April 2010. Discharged May 2015.
    $143,000 in debt discharged for $36,500, including attorneys fees. Money well spent!


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