Anyone use Undue Hardship to get student loans in BK too?

[BKisSucky]

Just started researching BK so please bear with me if I have lame questions..

(BTW, thank you for all who responded to my first post about filing Pro Se).

I just finished up school May 05 (technically I need one more class to graduate). Due to the fact that I just had my first baby (I was pregnant during my last semester), things got a little funky. Hubby lost his job and things got even worse. I never started making payments on the student loan, which I understand you have to make a good faith payment to get the Undue Hardship. Am I correct?

We most definitely qualify. Both DH and I are 1099'ers, so we can prove that paying the student loan would indeed cause undue hardship. But since I never made one payment, is it a moot point?

Anyone have experience with this? I understand the requirement for this are pretty rigorous, but figure it would be worth a shot if I am going to file BK anyway.

Thanks again everyone!

B

[StaciMM]

I don't have personal experience, but as I understand it the 'undue hardship' looks at present situation and future earning potential. It isn't so much about being in a difficult financial position, but being physically/mentally/otherwise limited so that any income you could possibly earn would barely cover living expenese. Basically, as I understand it, there has to be pretty much no hope of your financial situation improving. Not now, not in 10 years, or even longer.

[HopeinHorizon]

From what I understand, you can only get undue hardship if you are unable to work in the career field in which you went to school for...

Whether that be mental/physical/emotionally....

For instance, if you went to school for nursing, and were suddenly a quadraplegic... you obviously could not do what you intended to do.

Financial hardship is not what they look at for the most part when it comes to the student loan portion of Chapter 7, because after all we are all in that hardship to file in the first place. I think that there has to be something above and beyond even that for them to wipe out student loan debt...

[keepmine]

You don't have a prayer getting SL's discharged this early in the game. Another reason not to go pro se if you wanted to include student loans. You have to file your petitionand then, file a motion for an adversary hearing on the SL portion of your bk.
Do a google search using the term "brunner test". There is far more involved than just hardship. Last year, the Supreme Court rulled that a 70+y/o retiree could have 15% of his SS check garnished to pay old student loans.
Here' a case where SL's were discharged. Note. it took 4 years and two levels of appeals. Also note the documentation and expert testimony involved. The lawfirm was either paid by family memebers or, did it pro bono. That had to generate some billable hours.

http://creditboards.com/forums/index.php?act=Attach&type=post&id=238

[baybreeze]

I had student loans out when I filed for Chapt 7 bankruptcy in '03 but I had already read about student loans usually not being dischargable. My lawyer also told me they would not be discharged. And my income after all expenses came out to like - (negative $300....something per month)

I did speak to both student loan companies once I started getting really late on payments, etc...and both were always very willing to work with me. They ended up giving me several hardship defferals over a couple years, one even let me change my payment terms & extended it over a much longer period of time so that I could at least make small payments. (I also tried to negotiate with my credit card issuers myself but they were very UNwilling.)

But once my BK was discharged I was able to start making my student loan payments again...and I've even made some payments as much as 6 months in advance. SO at least these are now 2 good marks on my credit reports as my status is now "paid as agreed/on time".