Conditions for Cancelling All or Part of Your Loan

Discuss various money matters here. Loans (federal and private), scholarships, lottery winnings, or other school finance related information and queries.
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TIKITEMBO
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Conditions for Cancelling All or Part of Your Loan

Postby TIKITEMBO » Tue May 22, 2012 10:00 pm

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Last edited by TIKITEMBO on Wed Sep 19, 2012 11:50 pm, edited 1 time in total.

presidentk1
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Re: Conditions for Cancelling All or Part of Your Loan

Postby presidentk1 » Tue May 22, 2012 10:05 pm

i thought student loans were not discharged in bankruptcy

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beachbum
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Re: Conditions for Cancelling All or Part of Your Loan

Postby beachbum » Tue May 22, 2012 10:13 pm

No, it's always been like that; the problem is proving "undue hardship."

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TIKITEMBO
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Re: Conditions for Cancelling All or Part of Your Loan

Postby TIKITEMBO » Tue May 22, 2012 10:13 pm

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Last edited by TIKITEMBO on Wed Sep 19, 2012 11:50 pm, edited 1 time in total.

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TIKITEMBO
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Re: Conditions for Cancelling All or Part of Your Loan

Postby TIKITEMBO » Tue May 22, 2012 10:16 pm

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Last edited by TIKITEMBO on Wed Sep 19, 2012 11:51 pm, edited 1 time in total.

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blurbz
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Re: Conditions for Cancelling All or Part of Your Loan

Postby blurbz » Tue May 22, 2012 10:18 pm

Undue hardship is an almost impossible standard to meet. People here like to say that student loans are not dischargeable in bk but what they mean is "practically speaking, they're not dischargeable."

Having lots of loans and very little job prospects doesn't cut it.

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dextermorgan
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Re: Conditions for Cancelling All or Part of Your Loan

Postby dextermorgan » Tue May 22, 2012 10:19 pm

TIKITEMBO wrote:
presidentk1 wrote:i thought student loans were not discharged in bankruptcy



That's what I thought to, but I promise you I directly copy and pasted this text right as I was filling out the request through the government's website. Here it is through the same website (just not the check list form I had to submit.) I definitely know the conventional wisdom on this website is that they can't be discharged in bankruptcy. Granted, here it says the court has to find it would be an undue hardship to pay. All I can think in regard to that point is well, duh.


http://studentaid.ed.gov/PORTALSWebApp/students/english/discharges.jsp?tab=repaying/

The reason everyone says that they are not dischargeable is because it is nearly impossible to convince the court that not discharging them would cause an undue hardship. It is technically possible to discharge them, but it's not realistically going to happen.

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sunynp
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Re: Conditions for Cancelling All or Part of Your Loan

Postby sunynp » Tue May 22, 2012 10:23 pm

I remember reading that undue hardship means that you became almost permanently disabled after you took the loans out and there is no way you can pay them back. It is an almost impossible standard to meet.

edit: this has more information about the standard used and mentions a book for sale by the consumer council that deals with student loans:

http://www.studentloanborrowerassistanc ... ankruptcy/

Here is one quote:

Courts use different tests to evaluate whether a particular borrower has shown an undue hardship. A common test is the Brunner test which requires a showing that 1) the debtor cannot maintain, based on current income and expenses, a “minimal” standard of living for the debtor and the debtor’s dependents if forced to repay the student loans; 2) additional circumstances exist indicating that this state of affairs is likely to persist for a significant portion of the repayment period of the student loans; and 3) the debtor has made good faith efforts to repay the loans. (Brunner v. New York State Higher Educ. Servs. Corp., 831 F. 2d 395 (2d Cir. 1987). Not all courts use this test. Some courts will be more flexible, some less.




Does death cancel loans you have a co-signer on? I thought for sure it did, but in another thread people were debating it.

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TIKITEMBO
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Re: Conditions for Cancelling All or Part of Your Loan

Postby TIKITEMBO » Tue May 22, 2012 10:42 pm

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Last edited by TIKITEMBO on Wed Sep 19, 2012 11:51 pm, edited 1 time in total.

btowncane
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Re: Conditions for Cancelling All or Part of Your Loan

Postby btowncane » Wed May 23, 2012 10:32 am

I saw this story linked to ATL the other day. I guess diagnosis with Asperger Syndrome is one circumstance that meets the "undue burden" standard.

http://www.law.com/jsp/nlj/PubArticleNLJ.jsp?id=1202555456097&Asperger_Syndrome_prompts_court_to_forgive_former_law_students_debt

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sunynp
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Re: Conditions for Cancelling All or Part of Your Loan

Postby sunynp » Thu May 24, 2012 7:07 am

btowncane wrote:I saw this story linked to ATL the other day. I guess diagnosis with Asperger Syndrome is one circumstance that meets the "undue burden" standard.

http://www.law.com/jsp/nlj/PubArticleNLJ.jsp?id=1202555456097&Asperger_Syndrome_prompts_court_to_forgive_former_law_students_debt


In ths specific case it did because the woman was 63 and almost completely unable to even answer basic questions from the judge - she had to also make the showing that she wouldn't get better, which her age helped with and, of course, she had no money at all or she wouldn't have been in bankruptcy.

The Asperger's was severe enough she couldn't work and because she is old she is unlikely to recover.
Just an Asperger's diagnosis be itself wasn't enough to get rid of her loans.

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YCrevolution
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Re: Conditions for Cancelling All or Part of Your Loan

Postby YCrevolution » Sat May 26, 2012 10:41 pm

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tigyrgrl
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Re: Conditions for Cancelling All or Part of Your Loan

Postby tigyrgrl » Thu Jun 07, 2012 3:48 pm

In order to discharge student loans in bankruptcy an adversarial proceeding is typically filed. The burden of proof of undue hardship is ridiculously difficult, though not impossible to obtain. In addition each bankruptcy judge has a different opinion on what can and should be considered. If you have wage earning potential, you are almost universally disqualified from the undue hardship discharge.




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