Can Student Loans be discharged in CH7 for special circumstances?

[technoreid1]

Can Private or Federal Student Loans be discharged in a CH7 or a CH13 for special circumstances? (i.e., mental or physical disabilities?)


Just wondering if anyone knew?

thanks, techno

[HHM]

It depends...

Do a google search for Student Loan Hardship discharge. It is possible, it just depends on the nature of the disability and whether that disability effects the persons ability to work such that the person cannot both meet their necessary living expenses and pay back their student loan.

[technoreid1]

Looks like it is possible but might be difficult...What I did not
understand is when it talks about an "adversary proceeding"....Sounds like another trial or meeting outside the realms of a BK......

I found this definition from google: Hardship Discharge:

A student loan can be discharged or modified in a hardship proceeding. This is an adversary proceeding and requires the filing of a Complaint to Determine Dischargeability. A discharge will be granted if proved that repayment of the loan will create a substantial hardship on the debtor/borrower and his or her family.

The hardship standard is generally interpreted to mean that the debtor cannot maintain a minimally adequate standard of living and repay the loan at the same time. Further, it also requires a showing that the conditions that make repayment a hardship are unlikely to improve substantially.

Courts in some circuits will permit the judge to find that the debtor can repay a portion of the loan without hardship, and to discharge the balance of the loan.

[PaKettle]

My interpretation (I'm not an attorney and don't even play one on tv) is that the above means that if you are not making much money now and won't be making enough to live well on for a long time after bankruptcy, then you might be able to convince a judge that you should have the debt discharged. If you think that is your situation it might be worth a try.

Are you using an attorney? Or have you consulted with an attorney? Run it by some attorneys in consultations. Consultations are usually free. But have all your facts together before talking to one. See the thread recently on how to find an attorney, or what questions to ask. I wrote some stuff there about consultations.

[technoreid1]

Yes I am using an attorney and I am NOT working - but my wife is - she supports me, but cannot "support" me alomng with my students loans. She cannot pay them on her income alone. I cannot work due to a disability (but not classified as a disability by the state of CA because they say my wife "makes too much $") they (social security said if I got divorced I would probably get state disabilty based on my medical history) ---- So I have a disability according to my doctors, but not according to the state (because my wife makes too much $ and we share 1 "financial household".....

hope I made sense....

kind of a catch 22......


techno

My interpretation (I'm not an attorney and don't even play one on tv) is that the above means that if you are not making much money now and won't be making enough to live well on for a long time after bankruptcy, then you might be able to convince a judge that you should have the debt discharged. If you think that is your situation it might be worth a try.

Are you using an attorney? Or have you consulted with an attorney? Run it by some attorneys in consultations. Consultations are usually free. But have all your facts together before talking to one. See the thread recently on how to find an attorney, or what questions to ask. I wrote some stuff there about consultations.

[PaKettle]

Yes I am using an attorney and I am NOT working - but my wife is - she supports me, but cannot "support" me alomng with my students loans. She cannot pay them on her income alone. I cannot work due to a disability (but not classified as a disability by the state of CA because they say my wife "makes too much $") they (social security said if I got divorced I would probably get state disabilty based on my medical history) ---- So I have a disability according to my doctors, but not according to the state (because my wife makes too much $ and we share 1 "financial household".....

hope I made sense....

kind of a catch 22......


techno

I hope this doesn't offend you but if I were in your shoes I think I'd get divorced and "liive together"! Sounds like it would be better for you economically. But I can understand why that might not suit you.

What does your attorney say about your chances of getting your student loan discharged? From what I read, since you aren't working and are medically disabled, that should be enough to get it discharged because bankruptcy isn't about your wife its about you.

[technoreid1]

Thats a good idea about the divorce but I do not feel right about that.

Sorry if I made myself unclear, but the bankruptcy is joint, including my wife....so I am not sure if that would play a factor in getting "my" loans discharged.

I need to talk to my attorney about my student loans (if I can even get in touch with him-but I can get his secretary - and she is helpful)

thanks, techno

I hope this doesn't offend you but if I were in your shoes I think I'd get divorced and "liive together"! Sounds like it would be better for you economically. But I can understand why that might not suit you.

What does your attorney say about your chances of getting your student loan discharged? From what I read, since you aren't working and are medically disabled, that should be enough to get it discharged because bankruptcy isn't about your wife its about you.

[chpxiii]

From what I understand it is EXTREMELY difficult to get your student loans discharged. Even if you are disabled. It's almost like, you have to be brain dead.

I did, however, find this:

http://www.ed.gov/offices/OSFAP/DCS/loan.cancellation.discharge.html

So it seems that it will depend on case law in your jurisdiction. Let us know how this works out.

[technoreid1]

Thanks! I will look into it.....

Just talked to my attorneys office and they said "NO"...
and then I went on about "undue hardship"....

THEY STILL SAID NO???

thanks, techno

From what I understand it is EXTREMELY difficult to get your student loans discharged. Even if you are disabled. It's almost like, you have to be brain dead.

I did, however, find this:

http://www.ed.gov/offices/OSFAP/DCS/loan.cancellation.discharge.html

So it seems that it will depend on case law in your jurisdiction. Let us know how this works out.

[FreshLikeADaisy]

Looks like it is possible but might be difficult...What I did not
understand is when it talks about an "adversary proceeding"....Sounds like another trial or meeting outside the realms of a BK......

I found this definition from google: Hardship Discharge:

A student loan can be discharged or modified in a hardship proceeding. This is an adversary proceeding and requires the filing of a Complaint to Determine Dischargeability. A discharge will be granted if proved that repayment of the loan will create a substantial hardship on the debtor/borrower and his or her family...

Just fyi, this is something your attorney would file for you in your bankruptcy case. It doesn't happen in a different court or proceeding; it's part of your bk. Basically, they file this complaint to get a hearing, at which point the judge determines the facts regarding the student loan discharge. No other debts in your bk are affected by this, it's just for the student loan. That's all I know, but I hope it helps.

[FreshLikeADaisy]

Thanks! I will look into it.....

Just talked to my attorneys office and they said "NO"...
and then I went on about "undue hardship"....

THEY STILL SAID NO???

thanks, techno

They can file this complaint for you, but it's outside the realm of a regular bk and you will probably have to pay for it separately. Sucks, I know. Ask if it's a fee related thing; it may just be that your atty thinks it's such a lost cause that he doesn't file them, period. Kind of a cop out but if you really feel you have a case you might be able to talk him into it. The paralegal you spoke with isn't going to decide that; be sure you discuss it with the atty himself and be prepared to pay extra if he says yes. Good luck!!!

[PaKettle]

Could he represent himself in this extra hearing in order to avoid attorney fees if they are too high or if the attorney doesn't want to do it?

I have a feeling the attorney might be right, though. If it's a joint bankruptcy then if your wife is working, they will say she makes enough to pay the loan(s), that is, they will try to make that case. Do you mind saying how much the payment is? If the payment is very high, maybe you could get it reduced or maybe you could get it discharged...

[technoreid1]

The payment is about $580 a month and about $280 of it is in defferment (and has been for 4 years already!). I cannot pay any of it.

thanks, techno

Could he represent himself in this extra hearing in order to avoid attorney fees if they are too high or if the attorney doesn't want to do it?

I have a feeling the attorney might be right, though. If it's a joint bankruptcy then if your wife is working, they will say she makes enough to pay the loan(s), that is, they will try to make that case. Do you mind saying how much the payment is? If the payment is very high, maybe you could get it reduced or maybe you could get it discharged...

[technoreid1]

Is it a "seperate" hearing or does it occur during the 341?

Thanks, techno

Just fyi, this is something your attorney would file for you in your bankruptcy case. It doesn't happen in a different court or proceeding; it's part of your bk. Basically, they file this complaint to get a hearing, at which point the judge determines the facts regarding the student loan discharge. No other debts in your bk are affected by this, it's just for the student loan. That's all I know, but I hope it helps.

[technoreid1]

Thanks for all your info! You have really helped! How do you know all of this?

Also do you think it's pretty hard to get discharged?
And what can they do if I default? (which I do not want to do)

I am not working and everything is in my wife's name. My mother did co-sign for 1/2 of my student loan (the private portion)
but she does not own anything....

thanks, techno

They can file this complaint for you, but it's outside the realm of a regular bk and you will probably have to pay for it separately. Sucks, I know. Ask if it's a fee related thing; it may just be that your atty thinks it's such a lost cause that he doesn't file them, period. Kind of a cop out but if you really feel you have a case you might be able to talk him into it. The paralegal you spoke with isn't going to decide that; be sure you discuss it with the atty himself and be prepared to pay extra if he says yes. Good luck!!!