My father (for whom I'm inquiring) is permanently disabled, on dialysis and living on Social Security. He owns no property and has no savings. He currently has over $16,000 in credit card debt. We would like to discharge this debt and also put a private student loan into this bankruptcy. He is the only borrower on the loan but he is not the student. It is not a Parent Plus Loan, it is a private loan. We have not been able to discharge the loan due to Total and Permanent Disability because it is a private loan. Is this feasible?
As to student loans, you need to file a seperate lawsuit in the bankruptcy court to have it discharged. It appears to me you have two seperate and independent grounds to get the loan knocked out. The first is that it is an undue hardship. Based on the facts you supplied, it appears to be present. Second, an attorney could reveiw if the calssification of student loan could be challenged. Factors to be considered include but are not limited to whether money was sent directly to the institution.
It appears to be feasible. The question is it is worthwhile given the expense of having to file a seperate lawsuit. It can easilly be much more expensive that the actual bankruptcy.
Based on the circumstances you describe, it may be possible to discharge this student loan, but beware of any one that leads you to believe that it would be a certainty. Every discharge of a student loan requires a lot of hard work as well as luck.
Hope this perspective helps!
Your dad would have to file a bankruptcy case and ask in what's called an "adversary proceeding" in bankruptcy court to discharge the student loan. It probably isn't likely he'd win, but given his circumstance it might well be worth a shot. Even if he doesn't win, the lender might be willing to work with him at some point given these circumstances. I would speak to a bankruptcy attorney in your area.
Attorney Weinberg is correct on both counts. Your father has an easily-provable undue hardship based on the SSD and the loan might not be a real student loan under the IRS interest-deductible rules which apply in bankruptcy.
I disagree in that I think it will not be an expensive trial due to the SSD status. And private lenders, unlike governmnet lenders, don't have guarantors so they are not as quick to defend an undue hardship lawsuit. It's too costly for their easy-profit business model. Also, the loan might be securitized like every other loan in America. This may mean they cannot prove the loan in court.
Finally, you can look into the application of the statute of limitations to this private student loan.
Call Attorney Weinberg. He's in your neighbrohood.
I am sorry to hear about your father's situation. It seems to me that his student loan can probably be discharged, although it is ultimately up to the judge to decide. Based on what you have said he has a higher chance than most at such an outcome.
Student loans can only be discharged via a separate case called an "adversary proceeding." Let me know if you need more info.
Dan Gindes, Salem MA