Join the Meeting Place for Moms!
Talk to other moms, share advice, and have fun!

(minimum 6 characters)

Mom Confessions Mom Confessions

I am going to file bankruptcy to get rid of my student loans

Anonymous
Posted by Anonymous
  • 55 Replies

Okay not really just needed a new catchy tite "Bankruptcy took care of your student loans?" was not working. Just wondering if anyone else has ever heard of this

One of my friends filed for bankruptcy after 5 years of having really hard times, a lot of debt, and a foreclosure on her house. She also told me that because of the bankruptcy she does NOT have to pay back her student loans. I am not sure of all the details of her bankruptcy or about bankruptcy in general because I have never been there *knocks on wood* but I always thought there was no way to get out of student loans. Apparently there is an "undue hardship" exception. 

I was just surprised that you can do that especially with government loans 

http://studentaid.ed.gov/repay-loans/forgiveness-cancellation#discharge-in

Discharge in Bankruptcy

This is not an automatic process—you must prove to the bankruptcy court that repaying your student loan would cause undue hardship.

If you file Chapter 7 or Chapter 13 bankruptcy, you may have your loan discharged in bankruptcy only if the bankruptcy court finds that repayment would impose undue hardship on you and your dependents. This must be decided in an adversary proceeding in bankruptcy court. Your creditors may be present to challenge the request. The court uses this three-part test to determine hardship:

  • If you are forced to repay the loan, you would not be able to maintain a minimal standard of living.
  • There is evidence that this hardship will continue for a significant portion of the loan repayment period.
  • You made good-faith efforts to repay the loan before filing bankruptcy (usually this means you have been in repayment for a minimum of five years).

Your loan will not be discharged if you are unable to satisfy any one of the three requirements. If your loan is discharged, you will not have to repay any portion of your loan, and all collection activity will stop. You also willregain eligibility for federal student aid if you had previously lost it.

Posted by Anonymous on Aug. 2, 2013 at 10:57 PM
Add your quick reply below:
You must be a member to reply to this post.
Replies (1-10):
Anonymous
by Anonymous 2 on Aug. 2, 2013 at 10:58 PM
1 mom liked this
What? No they are supposed to be protected for people who try to get out of paying by filing bankruptcy. You can get out of everything else, but school loans you can't.
Anonymous
by Anonymous 3 on Aug. 2, 2013 at 10:58 PM
I've never heard that before.
cnjsmith
by Silver Member on Aug. 2, 2013 at 10:58 PM
It depends on if the loan is through a bank or a government loan. If it is government there is NO WAY to file BK on them. I worked for USDOE less than 5 years ago.
Hannahluvsdogs
by Ruby Member on Aug. 2, 2013 at 10:59 PM

You can't do that with government loans.

Anonymous
by Anonymous - Original Poster on Aug. 2, 2013 at 11:00 PM


I thought so also...but look it up it is true

Quoting Anonymous:

What? No they are supposed to be protected for people who try to get out of paying by filing bankruptcy. You can get out of everything else, but school loans you can't.



Anonymous
by Anonymous - Original Poster on Aug. 2, 2013 at 11:01 PM


She never qualified for bank loans it was only stuff from the government. 

http://studentaid.ed.gov/repay-loans/forgiveness-cancellation#discharge-in

Quoting cnjsmith:

It depends on if the loan is through a bank or a government loan. If it is government there is NO WAY to file BK on them. I worked for USDOE less than 5 years ago.



Anonymous
by Anonymous - Original Poster on Aug. 2, 2013 at 11:04 PM

That is what I thought but i was wrong

http://studentaid.ed.gov/repay-loans/forgiveness-cancellation#discharge-in


Quoting Hannahluvsdogs:

You can't do that with government loans.



cnjsmith
by Silver Member on Aug. 2, 2013 at 11:06 PM
Ok I should never say NEVER however I worked the collections side for 5 years and I haven't ever seen someone qualify for an undue hardship. Hell they even garnish up to 25% of social security benefits


Quoting Anonymous:


She never qualified for bank loans it was only stuff from the government. 

http://studentaid.ed.gov/repay-loans/forgiveness-cancellation#discharge-in


Quoting cnjsmith:

It depends on if the loan is through a bank or a government loan. If it is government there is NO WAY to file BK on them. I worked for USDOE less than 5 years ago.





Hannahluvsdogs
by Ruby Member on Aug. 2, 2013 at 11:07 PM

Well that must be new, because when I read the loan agreement for my student loans (a year ago) it said that bankruptcy wouldn't remove the loan obligation.

Quoting Anonymous:

That is what I thought but i was wrong

http://studentaid.ed.gov/repay-loans/forgiveness-cancellation#discharge-in


Quoting Hannahluvsdogs:

You can't do that with government loans.




Cutenessmom
by Gold Member on Aug. 2, 2013 at 11:08 PM

I did not know that becuase I was told you an not  get rid of students they our there forver!

Add your quick reply below:
You must be a member to reply to this post.
Join the Meeting Place for Moms!
Talk to other moms, share advice, and have fun!

(minimum 6 characters)