HHM - ? re: Student Loans

[needinganswers]

Hi, HHM

Am surfing the web and pulled this one from NEW JERSEY LAW IN REVIEW. This is what it says: A few exceptions to the general rule of nondischargeability exist, but they are difficult to establish and typically require the debtor to file with the Court, A student loan may also be discharged if repaying it will "impose an undue hardship on debtor and the debtor's dependents." But the "undue hardship" exception is difficult to establish.

I called the educational loan services (public, part of a non-profit agency) and verified that they did act as the servicer for my husband's student loan, but did not guarantee or insure the loan. The guarantee was the bank (alternative loan), and I co-signed on his behalf.

My question is: What does "and not "made under any program funded in whole or in part by a governmental unit or nonprofit institution."" Does this mean because the educational loan services serviced the loan, it may not be discharged after all? Am confused over the "made under any program funded . . ." part. Every school I know of is normally handled by some sort of educational loan servicers and/or guarantors, most especially federal loans. Interestingly enough almost all private student loans have something to do with agencies connected with the federal. I think am answering my own question. I hope I'm soo wrong.

Thanks again, HHM.

[HHM]

If the only non-profit entity that is associated with the loan is the loan servicing company, I do not think that will make the loan non-dischargeable. The only thing a loan servicing company does is process the payments, maintain your account (i.e. record keeping). Granted, most student loan servicing companies have the ability to offer loans and many offer refinancing, but if your loan did not originate with this company, the loan was underwritten by a commercial bank, a co-signer was needed, and they offered a reaffirmation...

The more you describe the particulars, the more I beleive you have a dischargeable student loan.

[needinganswers]

I've been doing a lot of searching, and I just can't seem to find specifics dealing with pure private student loans, of course, assuming this student loan is really private. What am looking for is a specific court case relating to ours, but like you said our case doesn't come around too often which makes it really hard to do research. Am sorry that I ask too many questions when I should leave this alone with the lawyer and make him do the research. I just can't help myself.

Section 523(8) 8.1 Made, insured or guaranteed by a governmental unit
. . . An Educational Loan is "made" by a governmental unit regardless of the immediate source of the money for the loan (immediate source was a trust with the beneficiary as the educational institution). . . What does this mean?

Section 523(8) 8.2 Made pursuant to a program funded by a governmental unit or nonprofit institution
. . . In deciding whether the nonprofit institution is allowed standing to object to a discharge the court will examine the corporate structure, whether dividends are paid and whether the institution competes with "for profit" institutions. What does this mean?

Again, I appreciate all your help, HHM.

Please don't give up on me. ( :

[missy2]

8/9 was the last day for my creditors to object. I never hear anything.

I have not recieved a discharge notice yet....as my lawyer told me the state of NH only has one bankruptcy court so it may take a bit.

BUT I stopped getting bills from all of my creditors including my student loans (as always I'm keeping my fingers crossed). But according to the research my lawyer did my private loans are associated with TERI - which is non profit / government, which makes it non-dischargeable.

My loans are with Consern and Wells Fargo.

[needinganswers]

Thanks for the input, Missy2.

Did you also have to go through an adversary proceeding to find out whether your loans were dischargeable or not? My lawyer said to file now before the discharge date because the bank could always come back to collect after the fact.

The loans were serviced through Great Lakes Educational Loan Services (part of Great Lakes Higher Education Guarantee) by KeyCorp, a private bank who funded the loans (but I guaranteed as a co-signer).

[needinganswers]

HHM, I found more info:

If the PROGRAM under which your student loan is issued, insured, administered is a FOR-profit, PRIVATE (non-government) entity, it may be dischargeable. (If the program itself, such as LAL, GSL, etc. receives nonprofit funding by participation of nonprofit entities, the loan is not dischargeable in bankruptcy) By using the broad language "made under any program funded in whole or in part by . . . a nonprofit institution," Congress intended to include within Section 523(a)(8) all loans made under a program in which a nonprofit institution plays any meaningful part in providing funds. The plain language of § 523(a)(8) indicates that it is the program that need be funded by a nonprofit institution. Section 523(a)(8) does not define "program," but the use of the modifier "any" suggests a broad definition. Congress did not use language indicating that the loan itself must be funded by a nonprofit institution, but that the program pursuant to which the loan was made be funded in part by a nonprofit institution. (See, In re Pilcher, 149 B.R. 595 (9th Cir. BAP 1993)

My husband's student loans are funded by a FOR-Profit, private bank. And the promisary note is from Key Bank (KeyCorp) not from Great Lakes Educational Loan Services. Well, there's a case in which the bank is a part of. The case states that Key Bank is a private lender. Kelly M. O'Brien v. Teri

I wish I could find a case relating to ours.

[IHateTheJones]

8/9 was the last day for my creditors to object. I never hear anything.

I have not recieved a discharge notice yet....as my lawyer told me the state of NH only has one bankruptcy court so it may take a bit.

BUT I stopped getting bills from all of my creditors including my student loans (as always I'm keeping my fingers crossed). But according to the research my lawyer did my private loans are associated with TERI - which is non profit / government, which makes it non-dischargeable.

My loans are with Consern and Wells Fargo.

Can you let me know what happens with this? I have the Consern Wells Fargo also.