Student Loan Bankruptcy on Disability Anyone Done It?

[PozitivelyColorado]

I'm actually somewhat desperate to get a handle on a rather large debt from student loans.  I got sicker than a pig in 2003 and was approved for SSDI and now that's what I live on.  I've used deferments and forbearances but that can't last forever.  The debt just keeps getting higher with interest.  My basic chronic conditions are going to keep me from making enough if I do go back to work to afford the student loan debt.  So, my question; how rough are they on you in bankruptcy court? Is it even possible to discharge a student loan in these circumstances?  Anything you know might be helpful...

[dtwpuck]

You cannot discharge a federally guaranteed student loan in a chapter 7 bankruptcy.  I believe that a chapter 11 (payment plan) can be negotiated, but it is at the will of the lender.

However, you can play the medical hardship card with your student loan.  There is a high degree of probability that they will negotiate with you if you are professional, courteous and upfront with them. 

You also have to option of a credit management agency.  There are tons out there.  You just want to choose one that is reputable.

I have a whole lot of experience with this.  If you'd like to know more specifics pm me or email me.

[PozitivelyColorado]

Anyone else?

[shepsmom]

I had a student loan "forgiven" because of health reasons. They don't try to collect it and it comes off your credit history. But you can't get another student loan or it activates the collection of the original loan. This was a LOOOONG time ago for me so I don't know if the law has changed. I will try to find the info for you tomorrow. I'm a lil busy today.

[Miss Philicia]

I agree with what dtwpuck stated, however I would add that you should go and get professional advice about this.  Some ASO's (GMHC for example in Manhattan) have legal services, and absent of that they will be able to refer you to somewhere that can provide this service pro bono.

[PozitivelyColorado]

The law that shepsmom is talking about that made a person renew old loans changed in 2006.  I already know about it.  They used to make you reinstate discharged loans if you got a new one.  That is no longer so.  The draconian republican thing that went into effect last year actually made THAT easier.

Look at this from the US Bankruptcy code:

http://caselaw.lp.findlaw.com/casecode/uscodes/11/chapters/5/subchapters/ii/sections/section%5F523.html

Item ( says there's an exception in the bankruptcy chapter 7 code to student loans that says that if repayment would "impose an undue hardship on the debtor" the loan is dischargeable.
Then there's this case that goes into more depth on what undue hardship is; (see the yellow highlighted part)

http://www.moranlaw.net/student_loan_brunner.htm

So my apologies to the sexy dude above (Mr. dtwpuck) that said that student loans can't be discharged, I know they can.  Just that it's harder than snot to do.  That's why I'm wondering if anyone here has done it.

[dtwpuck]

I hope you're right about being able to discharge them.  But it does sound like you will need an attorney to prove undue hardship.  Best of luck to you. 

[shepsmom]

http://studentaid.ed.gov/students/publications/repaying_loans/2003_2004/english/loan-discharge-cancellation.htm

This link has the rules about discharge of the loan.

http://studentaid.ed.gov/PORTALSWebApp/students/english/discharges.jsp?tab=repaying

This link has the information on who to contact.

Good luck- its not that hard. You just need to have a doctor fill out a form then you send it back to be approved-or not.

[budndallastx]

You should consult a bankruptcy lawyer to determine whether you can file a Chapter 7 (full discharge)  or 13 bankruptcy (repayment plan).  Chapter 11 is for corporations.  The lawyer will be able to advise you of your best option and usually the first visit is gratis.  (At least that's what the commericals say at 3am here in Texas.)