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OK, here's the deal:
I think I have a fairly good chance of having my $45,000 in student
loans discharged in a bankruptcy. I'm currently disabled (severe
depression) and unlikely to be able to repay the loans in the future.
But, of course, you never know what a particular judge will decide.
I'm in Olympia, WA (Thurston county).
Here's where I'm confused. I don't want a bankruptcy on my record for
10 years if I can't get my student loans discharged. I have about
$13,000 in credit card debt and owe the IRS $5,000 (I don't think that
can be discharged). What I'm trying to say is that the bankruptcy
being on my credit report for 10 years is not worth it to me UNLESS my
student loans are discharged to. As much trouble as I'm going to have
just paying off the other $18,000, I'm willing to try.
But it's my understanding that the decision about the student loans
doesn't come until AFTER the regular part of the bankruptcy is filed
and approved, etc. Is that really the case? Any ideas what I should
do?
Thanks in advance!
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But it's my understanding that the decision about the student loans
doesn't come until AFTER the regular part of the bankruptcy is filed
and approved, etc. Is that really the case? Any ideas what I should
do?
The case law is not encouraging. There's actually a specialized
treatise on the subject, which you might find in your county law
library or university law library; perhaps you can get it by
interlibrary loan from your pubic library:
Discharging Student Loans in Bankruptcy 2nd Edition
http://tinyurl.com/2ld53
Since you're in Washington, I'll add that there are two reported cases
of Americans trying to discharge their US student loans in Canadian
bankruptcy proceedings. One succeeded, the other failed (based on an
analogy by the judge with Canadian law that forbids such discharges).
In neither case did the US Government file proof of claim; but the
Lloyd's-invetor bankruptcy cases teach us that a bankruptcy judge can
pretty much do whatever s/he wants, knowing that most debtors haven't
the money to appeal.
In re Bialek, (1994) 25 CBR(3d) 271; In re Taylor, (1988) 68 CBR (NS)
93 (PEI (SC).
(A discharge in Canada would not affect the collectibility of a US
debt later in a US court if the creditor has not filed any proof of
claim or otherwise appeared in the case. Or so it seems; in Hongkong
and Shanghai Banking Corp. v. Simon (In re Simon), 153 F.3d 991 (9th
Cir. 1998) the creditor was said to have "participated" in the US
bankruptcy.)
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I think I have a fairly good chance of having my $45,000 in student
loans discharged in a bankruptcy. I'm currently disabled (severe
depression) and unlikely to be able to repay the loans in the future.
But, of course, you never know what a particular judge will decide.
I know that you can get your students loans forgiven under the
circumstance of a permanent disability that would prevent you from
ever paying them off. This would be pursued directly through the
administrator of the loan. As far as trying to get them discharged in
bankruptcy, it is very difficult to prove that paying them off would
create an "undue hardship" which is the criteria. Why don't you try
asking this on the alt.bankruptcy message board? There are several
attorneys that frequent that board who specialize in bankruptcy.
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OK, here's the deal:
I think I have a fairly good chance of having my $45,000 in student
loans discharged in a bankruptcy. I'm currently disabled (severe
depression) and unlikely to be able to repay the loans in the future.
But, of course, you never know what a particular judge will decide.
I'm in Olympia, WA (Thurston county).
Here's where I'm confused. I don't want a bankruptcy on my record for
10 years if I can't get my student loans discharged. I have about
$13,000 in credit card debt and owe the IRS $5,000 (I don't think that
can be discharged). What I'm trying to say is that the bankruptcy
being on my credit report for 10 years is not worth it to me UNLESS my
student loans are discharged to. As much trouble as I'm going to have
just paying off the other $18,000, I'm willing to try.
But it's my understanding that the decision about the student loans
doesn't come until AFTER the regular part of the bankruptcy is filed
and approved, etc. Is that really the case? Any ideas what I should
do?
You are correct. It is impossible to get a court determination that a
student loan is dischargeable before you file.
However, the student loan folks generally allow you to have the loan
forgiven in cases of disability without your filing for bankruptcy. You may
want to discuss this with them.
(And income taxes may be dischargeable. Speak with a local bankruptcy
attorney to find out if yours fall into this category.)
--
Brett
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OK, here's the deal:
I think I have a fairly good chance of having my $45,000 in student
loans discharged in a bankruptcy. I'm currently disabled (severe
depression) and unlikely to be able to repay the loans in the future.
But, of course, you never know what a particular judge will decide.
I'm in Olympia, WA (Thurston county).
Here's where I'm confused. I don't want a bankruptcy on my record for
10 years if I can't get my student loans discharged. I have about
$13,000 in credit card debt and owe the IRS $5,000 (I don't think that
can be discharged). What I'm trying to say is that the bankruptcy
being on my credit report for 10 years is not worth it to me UNLESS my
student loans are discharged to. As much trouble as I'm going to have
just paying off the other $18,000, I'm willing to try.
But it's my understanding that the decision about the student loans
doesn't come until AFTER the regular part of the bankruptcy is filed
and approved, etc. Is that really the case? Any ideas what I should
do?
Thanks in advance!
If you do explain your situation to Sallie Mae or whoever your student
loan servicer is, rather than file bankruptcy, they may be able to
forgive at least some of it, but whatever amount is forgiven will then
become taxable income.
As for the $5000 you owe to the IRS, it actually could be
"dischargeable" in a manner of speaking. There is something called an
"Offer In Compromise" (OIC) for people who have entered severe
hardship (i.e. disability) and do not expect their future income to be
sufficient to pay off the balance. Sometimes you can work out a
payment plan through the OIC program at a lower interest rate instead
of the 18% they usually charge, or alternatively, you can settle with
one lump sum.
Generally, the formula used for a lump sum settlement is something
like projected monthly income minus projected monthly expenses,
multiplied by a cost of living factor depending on the county and
state you live in. Then whatever dollar amount is left over, multiply
that by 48, that's your OIC. If it is zero or a negative number, then
the minimum amount for an OIC is generally $1000. Be careful with the
lump sum settlement OIC though, it is not a way to just get out of
paying taxes and could seriously affect your credit. You generally
need an attorney or CPA to walk you through it, and if their fees come
out to more than what could be discharged, well then, it's not worth
doing an OIC. You get the idea.
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According to Chris Johnson <caj11@my-deja.com>:
If you do explain your situation to Sallie Mae or whoever your student
loan servicer is, rather than file bankruptcy, they may be able to
forgive at least some of it, but whatever amount is forgiven will then
become taxable income.
I believe it won't necessarily become taxable income if he is insolvent
at the time the amount is forgiven. I don't know the details, but I
suspect he might qualify - it is certainly something he should look into
further if he is considering this approach.
--
Dave Wallace(Remove NOSPAM from my address to email me)
It is quite humbling to realize that the storage occupied by the longest
line from a typical Usenet posting is sufficient to provide a state space
so vast that all the computation power in the world can not conquer it.
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