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    Oct 2014
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    Default Re: Sallie Mae Private Loans and Filing Bankruptcy

    Quote Quoting starvision
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    I wanted to know if it's possible for me to file bankruptcy on my private loans by Sallie Mae? I'm permanently disabled and do receive social security benefits therefore my source of income is very, very limited. I am unable to work due to my permanent disability.
    It’s possible to get a discharge of student loans based on disability. But it isn’t easy. You have to do an adversarial hearing in the bankruptcy court and prove to the judge that paying the student loan would cause undue hardship. Different bankruptcy courts use different tests for making that determination. Most of the federal appeals courts that have heard these cases have settled on the Brunner test for determining undue hardship. The 8th Circuit uses a test called totality of the circumstances. The 1st Circuit, which includes Massachusetts has not yet decided on what test to use, so it will come down to what test your particular bankruptcy court uses.

    If you are successful in discharging the loan in bankruptcy that relieves you of your obligation to the student loan lender. But it does not get any persons who guaranteed/co-signed the loan off the hook. So your ex would still owe on the debt based on his guarantee of the debt. If you file a Chapter 7 bankruptcy your obligation to him to pay the debt or get him off the loan would not go away. It may be possible, though, to get that done in a Chapter 13 bankruptcy, if you qualify to go that route. If you could do that, you’d be totally off the hook for the student loans, though your ex would get stuck with them.

    This is a situation in which you really do need to talk with a bankruptcy attorney who has experience with student loan discharges to advise you. The attorney can look at your disability and financial information, the debts you have, and the divorce order and tell you what you might be able to do and, if it looks like you can get it discharged, the attorney can handle the bankruptcy for you. This is not a simple bankruptcy and if you do it yourself you might well lose on the undue hardship litigation simply because you don’t know how to do it.

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