HELP WITH STUDENT LOANS!
What About Student Loans?
Can Filing Bankruptcy Get Rid Of Student Loans?
The answer is simple: No...with one limited exception. It used to be
that you could file bankruptcy and get rid of certain student loans.
Well....not any more.....not since 1998 when the law was changed. The
idea is this: The government makes it easy to get student loans.
Normally...when you get a loan or credit from a bank or credit
union....there are certain hoops you have to jump through...to make sure
it looks like you can pay back your loans and to protect these lenders
in case you don't. Well....with student loans...it's different. The
government designed the student loan laws to make it easy for almost
anyone to get student loans. Why? To encourage people....just like
you....to stay in school and get educated. The price you pay is this.
Getting rid of student loans is tough....if not impossible. The
government loosened things at one end....and
correspondingly....tightened them at the other.
What Is That Limited Exception?
Section 523(a)(8) of Title 11 of the United States Code provides that
student loans are not dischargeable except where the student loans
"impose and undue hardship" on you. Sounds good...right? I mean it's
always a hardship to pay back something when you don't have the
money...right? But....don't be fooled. That's not what "hardship"
means.....at least not according to the Courts. Basically, to qualify
for a "hardship" discharge of your student loans, you have to prove that
you will not ever be able to pay back your student loans. Basically,
most Courts have held that this means that you are stuck with your
student loans unless you can prove that you are permanently and totally
disabled from ever working for the rest of your life. Sounds
harsh...doesn't it? But that's the way it is.
So....Can Bankruptcy Do Anything For Me?
Absolutely. Let's face it....the people collecting on overdue student
loans can be ruthless. You know this....if you are behind in paying back
student loans. Bill Collectors can make life very uncomfortable for you
and for your loved ones. It's hard to focus on a new career, when the
nasty calls and threats keep coming. Many times, they can even garnish
your wages....and this is in addition to the frustration you feel from
fielding all the nasty calls.
Filing bankruptcy can't get rid of student loans. That's the bad news.
It can't even stop the interest from accruing...but it can do this.
Filing bankruptcy can put the student loan people under control for up
to 5 years and this can give you some breathing room and a chance to
work into a better job or better pay.....so that you are in a better
position ...financially.... to pay your student loans and....a better
frame of mind to deal with them. During that time...no one can contact
you regarding these past due student loans. That's a relief!
What about getting new student loans?
If you are in "default" on your student loans...you most likely will not
get another student loan. If you are in default....and have tried to get
more student loans...you probably already know this. That is the
key....whether or not you are in "default".
If you are not in default....and if you can qualify for more student
loans....you can still get more student loans....even if you have filed
bankruptcy. Section 525©) of Title 11 of the United States Code makes it
illegal for you to be denied a student loan just because you have filed
bankruptcy. This is powerful.
So...What Should I Do?
Your first order of priority is to discuss your situation with an
experienced professional that deals with this type of situation on a
daily basis. You need to talk with a professional that can protect you
and who has the answers that you need.... to move on and past this
negative time in life.
Rubin & Associates, P.C. has handled thousands of similar
situation for people just like you. We know exactly what to do and how
to do it. We can use Federal Laws to get you fast protection.
There is only one big problem! We cannot help you, if we do not know you.
You need to call us for a FREE Confidential appointment. Things will not
get any better by themselves. Come on in and talk to us.
Call toll free 1-800-THE-DOGS
Student Loans: A Tough Nut To Crack
Student loans are not dischargeable in bankruptcy. There are, however,
several options to help borrowers with defaulted student loans. The
following is just an introduction to this topic, and only meant to point
you in the right direction.
I. Loan Cancellation:
These types of federal remedies are available to you even if your
student loan is not in default. Keep in mind, however, that not all
types of loans are eligible for cancellation. To find out what type of
loan you have, contact the National Student Loan Data System at
1-800-4-FED-AID, or online at
www.nslds.ed.gov.
The following are the main federal programs for student loan
cancellation:
1. Closed School: Applies to Direct Loans, Perkins Loans and
FFELs. You must have been enrolled in school at the time of closure. If
you withdrew, the withdrawal had to occur within 90 days of the closure.
2. False Certification: Applies to FFELs and Direct Loans, but
not Perkins Loans. To qualify, you must show that you were not able to
meet eligible state requirements for the job you were training for, or
that the school altered or forged loan or check documents. This type of
discharge applies only to loans received on or after January 1, 1986.
3. Total and Permanent Disability: This type of discharge applies
to FFELs, Direct Loan and Perkins Loan. You must be found totally and
completely disabled to be eligible for this type of discharge, and must
provide documentation from a physician that you are unable to work
because of an illness or injury that is expected to continue
indefinitely or result in death. This type of discharge is not available
to you if the condition existed at the time the loan was made. However,
under new rules, pre-existing conditions may qualify if you suffered
substantial deterioration after the loan was granted.
4. Unpaid Refund Discharge: As part of the 1998 Higher Education
Act, this discharge will allow you, if you borrowed after January 1,
1986, to discharge the amount of the loan to the extent of the amount of
refund owed to you, which the school failed to reimburse. Included in
this discharge are reimbursements of tax refunds seized by the IRS in
repayment of the student loan debt to the extent of a refund the school
owed you, but never paid.
II. Repayment Options:
Even if you do not qualify for a loan cancellation, there are still some
strategies to explore in dealing with defaulted student loans.
1. Loan Consolidation: This program allows those who do not
qualify for a loan cancellation to consolidate their defaulted loans
into a Federal Direct Consolidation Loan with an Income Contingent
Repayment Plan (http://www.ed.gov/directloan).
2. Deferments and Forbearances: You may qualify for either a
deferment or forbearance even if the loan is in default. The main types
of deferments are: student deferments; unemployment deferments, and
economic hardship deferments. However, keep in mind that deferments may
not exceed a three year time period. Forbearances are available even
when the loan is in default, but the interest continues to accrue during
the forbearance period.
III. Offset of Federal Benefits:
Finally, borrowers whose student loans are in default often inquire as
to whether their Social Security Benefits can be taken by the government
in repayment of defaulted student loans. Under the 1996 law, the federal
government can take benefits from Social Security Retirement and
Disability Benefits, Certain Railroad Retirement Benefits, and Black
Lung Part B Benefits. However, keep in mind that there are limits on the
funds that the government can take, and that the borrower can fight
back. You must receive notice of a hearing before any of your benefits
are taken.
If you owe on a defaulted student loan, your hearing will be with the
Department of Education. At the hearing, you can either challenge the
offset, or set up a repayment plan prior to having your benefits seized.