DISCHARGE STUDENT LOANS IN BANKRUPTCY
The Law Office of Neil E. Colmenares, P.C. are attorneys who concentrate in the complex area of Bankruptcy Law with a focus on helping individuals discharge Student Loans in Bankruptcy. Our Student Loan Bankruptcy Attorneys will help you eliminate Federal, State and Private Student Loans.
The Problem with Student Loans
Those who have Student Loan Debt know all too well how burdensome Student Loan obligations when not paid can be such as Wage Garnishments, Tax Refund Intercepts, Seizure of Government Benefits such as Social Security, etc. Not to mention the fact that these Student Loans continue to accrue interest with outrageous collection fees added on. To add insult to injury, most graduates are unable to find meaningful employment after graduation. For those lucky enough to find employment, their meager starting salary is not nearly enough to pay for the necessities of life not to mention a student loan payment. All during this period the Student Loans continue to accrue interest.
A Possible Solution to Student Loan Debt: Bankruptcy
If you are unable to pay your Student Loans, are struggling to make ends meet to avoid garnishment from the government, Student Loan relief through Bankruptcy may help you discharge those Student Loans (get rid of Student Loan debt).
In a recent case, we were able to eliminate over $100,000 in student loan debt for one of our clients!* There is no amount of Student Loan liability that is too large or small to discharge in Bankruptcy.
The following are the general requirements for discharging Student Loans in Bankruptcy. Please note, these are general guidelines which should be reviewed with your Bankruptcy Attorney/Lawyer before taking any action.
Please note, the standard for discharging Student Loans in Bankruptcy is high. Although difficult, discharging Student Loans in Bankruptcy is NOT impossible.
“Undue Hardship” Test for Eliminating Student Loans in Bankruptcy Applicable in New York (and 48 of the 50 United States)
(1) The debtor cannot maintain, based on current income and expenses, a minimal standard of living if forced to repay the loans;
(2) There are indications that the state of affairs is likely to persist for a significant portion of the repayment period; and
(3) The debtor made a good faith effort to repay the loans.
Although the standard for discharging Student Loans remains unchanged, B.A.R.F. (my acronym for the 2005 Bankruptcy “reforms”) expands the type of debts that may be excepted from discharge as Student Loans to include loans from for-profit lenders if they are qualified educational loans as defined in sections 221 (d)(1) of the Internal Revenue Code (any indebtedness incurred by the taxpayer solely to pay qualified higher educational expenses). Debtors who have incurred debt for other purposes should argue the debt is dischargeable.
This same IRC section states that in order to considered a qualified educational loan, the loan must be incurred to pay expenses for education furnished during a period when the recipient was an eligible student. So if the Debtor was not an “eligible student,” the Debtor should argue the debt is dischargeable.
Section 472 of the Higher Education Act defines what higher educational expenses are. If the Debtor’s expenses do not fall within these defined categories, the Debtor should argue the debts are dischargeable.
Noteworthy- Some Judges will require you to inquire into the “Income Contingent Repayment,” “Income Based Repayment” or similar plan before entertaining a Student Loan discharge-ability case in Bankruptcy. Click on the following link for more information on the “Income Contingent Repayment” plan as well as other programs you may qualify for. It is strongly suggested you exhaust all of these options before commencing a Student Loan Discharge case in Bankruptcy. http://www.direct.ed.gov/RepayCalc/dlindex2.html
Schedule Your Student Loan Bankruptcy Discharge Consultation
To the extent possible, have ready the following documents for your consultation.
1) An itemized list from each school you attended stating what the “cost of attendance” was for the time period you attended that school. This must be on school letterhead.
2) Written proof that you inquired into and were approved/denied all the repayment options at http://www.direct.ed.gov/RepayCalc/dlindex2.html. Please be sure to put your requests in writing and send by certified mail. Be sure to put the certified mailing number on your letter before mailing and save all correspondence.
3) An itemized list with receipts showing how much you received from each student loan company along with the date of each disbursement.
4) An itemized list stating when and how you spent the student loan proceeds with receipts if possible. Example- rent, food, transportation, etc.
5) A written diagnosis from your caretaker if you are claiming a disability. Example- a doctor’s note stating your condition along with the doctor’s opinion as to the limitations you face because of that condition. Please note, your caretaker should be willing to testify if necessary.
6) The most recent student loan bills you have received from each student loan company. If your student loan company has changed since first taking out the loans, please provide the most recent bill from each company.
Once you have these documents, fill out our Quick Contact Form and schedule your Student Loan Bankruptcy consultation with this office. Consultation fees start at $40.00.
Another Option To Consider
The less credit card debt you have, the greater the chances of being able to pay your Student Loans. Remember, with extremely limited exceptions, you will be stuck with your Student Loans for the rest of your life unless you are able to convince a Bankruptcy Judge that repaying your loans will cause an Undue Hardship. The third prong of the “Undue Hardship” test discussed above requires that you have made a “good faith” effort to repay your Student Loans. By eliminating as much non-Student Loan debt as possible, the more likely you will have funds available to pay your Student Loans and meet the “good faith” element of the “Undue Hardship” test.
Therefore, consider Ordering Fight Back! The Ultimate DVD Guide to Eliminate Credit Card Debt. For less than what most lawyers will charge you for an hour of their time, this product was designed to help good people eliminate credit card debt on their own and without the need of a costly lawyer. I strongly suggest you order this product before spending thousands of dollars in the never ending cycle of living in debt slavery.