You can file an adversary proceeding in which you argue that repaying the student loans would place an undue burden upon you. You need to essentially be living as frugally as possible and have no realistic possibility of repaying the debts in the immediate future. It is a tough standard but retain a good bankruptcy lawyer and make the argument. Good luck.
YOu would need to sue the student loan lender as part of your bankruptcy in what we call an "adversary proceeding" and prove undue financial hardship. There are lawyers who specialize in this type of litigation, so do your research and hire someone very experienced.
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Google IBR. It is an income based repayment government program that calculates your payments based on your income. Student loans are very difficult to discharge as the it is so hard to meet the qualifications. ie Can't maintain a minimal standard of living.
This answer is general and is not intended to create an attorney client relationhsip and is for informational purposes only.
When congress changed the bankruptcy laws in 2005 it protected lenders more than people who need a fresh start. One major change was to make "private" student loans non-dischargeable like government backed student loans. So like the other posts indicate, the chances of you discharging this loan is are "slim and none." You're much better off applying for an income based repayment plan through the U.S. Department of Education. And since are studying to be a teacher then there may be other programs through the Dept of Ed that will allow you to work off your student loans by serving any an underprivileged area. Good luck.
I disagree with Attorneys Needleman and Neel if in fact your loans are NOT FEDERAL. The program they site DOES NOT apply to private loans. You will find that out when you call that program which you can at 1 800 433 3243 . You are wrong when you state such loans cannot be "discharged through bankruptcy". You can if you prove undue hardship! First and foremost, you need to speak to an attorney who practices and has performed a number of student loan trial as Attorney Larkin provides. Most bankruptcy attorneys (probably 99% is my guess) have NEVER done filed a student loan adversary lawsuit to discharge such loans, but there are some out there. I have filed over 42 student loan adversary actions in Washington State and 6 appeals and one of my trial cases is now before the 9th Circuit by the debtor acting pro se (we won at trial level). Secondly, I STRONGLY SUGGEST THAT YOU SPEAK TO SUCH AN ATTORNEY RIGHT AWAY AS YOU MAY WANT TO DO A CHAPTER 13 CASE TO "DRAG THAT CREDITOR OUT 5 YEARS WHILE YOU ARE BACK IN SCHOOL IF YOU STILL CONTINUE TO WORK SOME! ALSO, THE LAWS MAY CHANGE IN THIS AREA OF LAW IN FUTURE WHILE YOU ARE IN CHAPTER 13 (There has been some discussion in the political area and who knows what will happen and the difference between Federal vs Private loans in those changes! ). If you are wrong and your loans are deemed federal because of being insured, etc. by Federal Government, then the other attorneys comments to join that program are true in joining that Federal Program (they will tell you at that ph # if your loans qualify if Federal) . It used to be called the WIlliam D Ford program, and then the Direct Loan program. But if you have all the private loans, the ICP and IBR plans do not care what your private payments are and will not take that into consideration. So, I do discuss and go through that program with all my clients if it aplies, but to state you should or should not join cannot be known w/o more facts. It takes one hour at my first meeting with clients to quickly go through many facts governing the undue hardship test! Finally, no one can advise you if you should do a ch 13 vs a ch 7 case with respect to the filing of the student loan discharge w/o knowing more. And if you will have no income if you go back to school, you wont qualify to be in a ch 13 anyway also. But right now, you can file a chapter 13 case and discharge all the other debt at the end other than student loans. Whether to sue on the loans at the end of your chapter 13 depends on the facts at that time, but not the law. The law when you file governs. But you can always later file another ch 13, or possibly dismiss one if the laws favorably change and then refile possibly. Dont hold your breath. But if you cant afford the debt now , stop the garnishment by filing bankruptcy. However, other facts may govern the advise on winning a student loan trial . But before you file a bankruptcy try and employ an attorney to see if a settlement can be reached. I have two cases right now where my clients have been sued on Private loans and believe both will stop all legal action on agreed upon terms. Good luck in your case. Sincerely , Richard . PS..Even if you win a trial, the court could impose a duty to pay some amount of payments at an unknown interest rate for an unknown number of years all depending on what the judge believes you can afford or should be able to (The Saxman case in 9th Circuit) Good luck. (YOu might think $50,000 is huge (it will be higher after interest accrues during a bankruptcy too), but I have had many over $200,000 and a single gentleman with over $700,000 in such loans! Have a great weekend and find that attorney in your area now. You might call all the local judges' clerks and ask if they know an attorney who has litigated such loans in your area!
The realistic, down to earth, no bs answer is: no.
IBR would work if your loans were not already defaulted. Once student loans are defaulted, there are very few options unfortunately, especially non-federal loans. As a recent law school graduate, I've looked carefully into whether student loans are dischargeable. The story is that back in the '70's when student debt was dischargeable, lawyers and doctors were filing bankruptcy upon graduation in order to discharge the debt, and that is the main reason why the law was changed. Currently, it is practically impossible to meet the standard of discharging student debt, because you have to show that you will never be able to be gainfully employed doing anything (note, the standard is not "I will never practice law or medicine," it's, can you make any money, doing anything?). If you can make money doing anything, your loans are with you for life.
I have had people approach me and ask me whether they can take out a bank loan to pay off their student loans, and later discharge that loan. The answer, once again, is no. "Student loans" are defined by the Internal Revenue Code, which accounts for loans taken out in order to pay student loans. You just can't get out of them.
Even chapter 13 trustees won't play ball - they won't allow them to be paid through the plan, and they won't even allow you to account for the monthly payments on I and J or CMI. They literally pretend like they're not there, it's amazing.
The reason I say all this is because if you're considering paying a lawyer money to take on private student loan holders, get a second opinion, because that may just be money that you could put to better use staving off the creditors.
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