I am deciding whether or not I need to file bankruptcy. I currently have $89,000 in student loans and on top of that I have $20,000 in medical bills that I cannot pay for because I do not have health insurance. I have a job and I take home about 1440.00 monthly after taxes and I also have two dependents. I am really confused about what can and cannot be discharged. Is it just private loans or Federal ones?
I am caring for a child that has a developmental disability. It is where most of my resources go. Would that help my case at all?
Generally speaking, all student loans (both public and private) are nondischargeable in bankruptcy under 11 U.S.C. 523(a)(8) unless requiring you to pay them would impose an undue hardship. Unfortunately, the "undue hardship" standard is nearly impossible to meet unless you are totally and permanently incapacitated - which your facts indicate that you are not.
In some jurisdictions, though, bankruptcy judges have been more inclined to grant a partial discharge of student loans if you can meet the hardhip standards in your jurisdiction. You would have to consult with an Indiana bankruptcy attorney to confirm that state of the law in your jurisdiction.
There are reasons why you might still want to consider bankruptcy even if the student loans are nondischargeable. A chapter 7 bankruptcy would get rid of all of your medical debts and thereby improve the possibility of making some payment on your student loans. Or if you have any money left over after paying your monthly living expenses, you might consider a chapter 13 case, which would only require you to pay in your extra disposable income over 3 years, and which might allow you to direct all of that money to your student loans while disregarding the other unsecured debts. (Again, the practice in your jurisdiction would determine whether you can treat student loans differently from other unsecured debts in a chapter 13 plan.)
Most bankruptcy attorneys offer a free consultation. Make a few calls until you find one that's willing to give you more than 20 minutes of his or her time. That way, you can sort through the confusion and decide what's best for you in the long run.
Aside from bankruptcy, you could try contacting your student loan servicer to see what other repayment programs are available. Income-contingent repayment plans are increasingly available, and might be able to relieve some of the stress you're experiencing. (Or you could ask whether a financial hardship forbearance is available.)
Good luck to you!
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4 lawyers agree
Student loans are not chargeable if you can hold a job, private or federal.
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I would put off any bankruptcy until about March of 2013. With the upcoming election, there may be substantial changes in what can and cannot be discharged regarding student loans. This is a crisis that Congress will likely address next year. Not sure it will work to your benefit, but the current law surely does not.
3 lawyers agree
In your case, you won't be able to discharge either. Sorry. Maybe (hopefully) the laws will change after the election....it might be worth it to wait and see what happens.
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