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  1. #1

    Default When Are Student Loans Able to Be Discharged in Bankruptcy

    My question involves bankruptcy in the state of: OH

    Under what conditions can student loans be discharged in bankruptcy? Please give specific examples.

  2. #2
    Join Date
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    Default Re: When Are Student Loans Able to Be Discharged in Bankruptcy

    Sorry - never. I just filed BK a couple years ago. You can discharge pretty much any other kind of debt, credit cards and even gambling debt. But the student loan lobbyists/crooks made sure that student loan debt can never be discharged in BK.

  3. #3
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    Default Re: When Are Student Loans Able to Be Discharged in Bankruptcy

    Whether a student loan is discharged based on hardship is not automatically determined in the bankruptcy process. You must file a petition (called an adversary proceeding) to get a determination.

  4. #4
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    Default Re: When Are Student Loans Able to Be Discharged in Bankruptcy

    AZPat, that's not correct - however, the standard for getting a full or partial discharge is onerous.

    Quote Quoting Pennsylvania Higher Education Assistance Agency v. Taylor, Dist. Court (ND Ohio 2005)
    The Sixth Circuit uses the three-part test set forth in Brunner v. New York State Higher Education Servs. Corp., 831 F.2d 395 (2d Cir. 1987), to determine whether there exists an undue hardship warranting discharge of a student loan obligation. See In re Oyler, 397 F.3d 382, 385 (6th Cir. 2005) (explicitly adopting the Brunner test). As such, a debtor seeking discharge of student loan debt must satisfy the following three factors of the Brunner test by a preponderance of the evidence:

    (1) that the debtor cannot maintain, based on current income and expenses, a "minimal" standard of living for herself and her dependents if forced to repay the loans;

    (2) that 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) that the debtor has made good faith efforts to repay the loans.

    See Tirch v. Pennsylvania Higher Educ. Assistance Agency, 409 F.3d 677, 680 (6th Cir. 2005).
    Very few debtors qualify for any relief. If you want examples, Google is your friend.

  5. #5
    Join Date
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    Default Re: When Are Student Loans Able to Be Discharged in Bankruptcy

    Quote Quoting rogerfrancis
    View Post
    Under what conditions can student loans be discharged in bankruptcy? Please give specific examples.
    https://www1.salliemae.com/after_gra...bankruptcy.htm

    There is a move in Congress to make the private loans dischargeable but so far it hasn't become law. You should write your congressperson if you believe that private student loans should be dischargeable. I doubt the federal student loans will ever be dischargeable unless you can prove undue hardship.

    You can apply for them to be cancelled if you are disabled, but that is not through a bankruptcy proceeding.

  6. #6

    Default Re: When Are Student Loans Able to Be Discharged in Bankruptcy

    As Mr. K pointed out, the Brunner test is NOT an easy one to pass, but it can be done, IF the totality of circumstances falls together just right. If you're an employeable, able-bodied 30-something, it's an incredibly high hurdle to reach. It's generally reasonable to project that you've got decades of employment and earning increases/advancement ahead of you. But, if you're a 58 year old with chronic health problems, whose career path is limited and whose earning potential has peaked or is declining, with little or no hope of improvement in the future, you may have a much more successful run at it.

    And, as Android pointed out, inability to earn a living due to disability also points to chronic and perminant inability to pay, and can provide an avenue out as well.

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