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Will bankruptcy remove your student loans?

Chelsea Hayes

in Student Loans

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Heather Maxwell on December 10, 2018

I worked for Direct Loans so I know a little about these things. You have a couple of options. If your income is very low, you can change payment plans to the "Income Contingency Plan. This plan is where you make the payment according to your income. The payment can be as low as nothing a month. Are generally payments of $12 a month. After 26 years, the federal Government will forgive the loan and you will not have to pay. Other options are different. You can stop payments for a number of reasons. Call Direct Loans for more information. A deferment stops payment and that the governor will pick up the interest on the subsidized part of your loan. You can get a forbearance, which will stop payment on your loan, but still do not accumulate interest on all parts of the loan. I live in the State of WA. I did a bankruptcy 7 years ago, but was not able to include my student loans. I was told by my lawyer that I could have included them if I had paid to them constantly for 5 years prior to the bankruptcy. I had only paid on them for 2 consecutive years at any one time... between extensions & indulgence. Like many others, I'm going to be paying on these damn loans with my Social security Checks... never mind choosing between eating and medicine. ;) The only way to discharge a student loan through bankruptcy would be to demonstrate a hardship. I am not referring to the 'difficulties' as in, gee it's hard for me to pay. I refer to the difficulties such as those that I am totally disabled and can't work. The second way out is to emigrate. Student loans are one of those loans that do not disappear. If you file bankruptcy,student loans are very much not exempt. You still have to pay. The Bankruptcy Code used to say that the student loans can be discharged if they were more than 7 years of age And some other criteria were met. In recent years, the Code has been changed and now the Bankruptcy Code says (in 11 USC 523): "(a) A discharge ... does not discharge an individual debtor from any debt- (8) for an educational benefit overpayment or loan made, insured or guaranteed by a governmental unit, or made under any program funded in whole or in part by a governmental unit or nonprofit institution, or for an obligation to repay funds received as an educational benefit, scholarship or stipend, unless excepting the debt from discharge under this paragraph will impose an undue hardship on the debtor and the debtor's dependents;" This means that you can only discharge student loans in bankruptcy if you can show that repayment causes an undue burden on you or your dependents, and like someone said in a previous message, this does NOT simply mean "Gee these things are hard to pay." I read a case once the debtor was left paralyzed from the waist down, and the Bankruptcy Court will not allow you to meet all of your student loans because he could still work a desk job. I think that the earlier publication by the person who used to work for Direct Loans has some really good ideas for dealing with student loans, but please keep in mind that nothing of what you say in this posting or in any other publication make up legal advice, it is simply my understanding of the facts. Please read! If you and your wife should 80grand you probably don't owe all of that to federal (staford) loans. the federal loans do not go away, but if you went to a private school that is much more expensive than the federal, you probably have extra "gap" of the bank's loans. loans to go! I'm about to drop about 50g of 120g. most of the credit cards and student gap loans. I have declared Chap. 7 Bankruptcy in the year 2000. He was discharged, and my student loans were included. However, everyone says that I still owe the money. So the question is, does the Judge's word not count? If he accepted the bankruptcy lock, stock, and barrel, does not matter, the student loans still count? I've been paying since the mid-80s.... many forebearances. If the judges word does not count, how do you go about the application? Listing Student loans on the bankruptcy petition does not mean that they are discharged. In order to receive a discharge you must ask the court specifically for the discharge of student loans. This is done through an adversary proceeding with notice to the student loan holder. It is very similar to the conclusion of a civil trial during the bankruptcy proceeding. The discharge you received said that "all dischargeable debts" were discharged. This does not include student loans, backed by a government agency, because they are not dischargeable by law, section 523(c)8 of the Code, unless certain criteria are met. These criteria should be determine by the court through a "trial". Due to bankruptcy reforms in 1998 and 2005, it is almost impossible for the average person to discharge federal or private student loans through bankruptcy. Although your student loan cannot be discharged in bankruptcy, a bankruptcy court may be able to ease an overwhelming debt burden. Some courts may be able to download a part of your student loans, but this is rare and varies by court. In most cases, the judge will incorporate your student loans into your debt repayment plan under Chapter 13 bankruptcy. Any remaining balance after the payment plan ends will still be due, but your other debts should be paid by then A bankruptcy will not remove student loans but will include the student loans in bankruptcy. The debt is gone, but any credit report listing will continue to be listed as included in bankruptcy.


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