A Successful Student Loan Discharge, Totality of Circumstances

[cyn5]

Thank you everyone for your responses. I have given some consideration of requesting they garnish my wages, because I was told that they can only garnish 10% of your gross, which would be about 1/3 of what they are wanting. Anyone know if there's an online source about what they can garnish? Per state I assume?

CurtInks - have you found out any more info on this? I know that the fed gov can garnish 10% of your income, but of course with private loans (assuming by the amount, you may also have some of these) they need to actually get a judgement before garnishment.

I agree with you though, better off to let them garnish since your income is lower and they can only take a small %.

I wish I had never gone to college or grad school!

Good luck:-)

[Macy]

I'm in the same boat as you, CurtInks, with the amount owed. Not sure what the hell to do about it. I'm just about 59 yrs old. Sounds totally nutso! But after coming to terms with deciding to start the chap 7 bk on cc's rather than go homeless or commit suicide, I've decided I simply can NOT destroy myself over these loans. I only have one life to live & only so much time on this earth. I simply can't allow myself to lose it over loans I can not afford to pay. "My" higher education does NOT pay my bills. (I can't really even use it for anything.)

I'm in California. It's 15% here, not 10%. A friend of mine's wages are being garnished for student loans. He said it took them yrs before they finally started doing it.

[inpain66]

I think what the person who told you that might be referring to, in addition to the forgiveness program already mentioned, is this:

http://www.finaid.org/loans/publicservice.phtml

If your loans are federal not private, the above program lets you pay on them (income sensitive payments, so that is good) for 10 years and the remaining balance is forgiven. You just have to consolidate your fed loans with Direct, as you will read. No big deal. Good luck.
If your loans are private, then you are in the same boat as me!

That public service loan forgiveness program is a JOKE. You have to get your loans on a 120 month payment plan (10 yr plan) and after the 10 yrs your loans will be forgiven BUT you will have no balance left since you have to be on a 120 month payment plan to qualify. If you read the actual program details it even states that after 10 yrs there will be no loan balance to forgive!!

[el222]

That public service loan forgiveness program is a JOKE. You have to get your loans on a 120 month payment plan (10 yr plan) and after the 10 yrs your loans will be forgiven BUT you will have no balance left since you have to be on a 120 month payment plan to qualify. If you read the actual program details it even states that after 10 yrs there will be no loan balance to forgive!!

inpain66 you are not correct. With the Public Service Student Loan Forgiveness Program, if you make decent money- say 60- 70,000 (depends) a year, true you may have paid the balance anyway after 10 yrs through the IBR. However, someone making 36,000 with a substantial federal student loan balance will benefit hugely from this plan. You are not required to pay your loans under the IBR plan within 10 years, you would normally opt for the 25 yr plan. You will have any remaining balance 100% forgiven with this plan. The less you make and the higher your student loan balance, the better you make out. They go off of your original loan though, so any interest or penalties that have been accruing will not be automatically erased. If your loans aren't all that high and you make fairly good money, then this program most likely will not benefit you.

Of course this program is only for federal student loans and you must be working in public service or any non-profit organization. I have $100,000 in student loan debt. $65,000 of it is federal. If I could find a job at a non-profit or in public service making $40,000 with only modest salary increases, then 1. my payments would be low and 2. my remaining loan balance would be wiped out in 10 years (assuming I make all my payments on time) and. It's a complicated formula, but essentially after 10 yrs my remaining balance of 28,000 would be wiped out. I will have paid 48,000 toward it.

Here is the website with all the information. It has a calculator for it.

http://www.finaid.org/calculators/ibr.phtml

Now my problem is that I have been unemployed since June of 2008. Never in my life did I think I would be unemployed for more than 2 weeks, let alone nearly a year. I can't find any job, let alone on that qualifies for the IBR student loan forgiveness program. So much for a Masters of Fine Art degree.

[Txgirl]

Just finished reading the BK case. I have been told it's nearly impossible to get SL discharged in BK though.

When they look at potential for earnings, what exactly are they considering? For example, I am in my field of study and have very few raises. If you look my husband's potential, he has been at the same job 10 years and you can see his pay raises. He makes a little more than I do now. He has been there 10 years, me 2 years (with a degree, him no degree).

However I am assuming they are looking at disabilities, medical problems, mental health diagnosis as far as earning capacity?

[HHM]

The factor is not just earning capacity, its.

Earning capacity,
Living Expenses,
Amount of Debt, etc.

Granted, it is true that usually the debtor needs a significant decrease in earning capacity to get out from student loans, but as the case indicates, there are other ways to go about it.

[BFH]

That's terrific. I feel a little better having read it. It gives me hope.

[inacorner]

When I talked with a lawyer he mentioned that my situation would be interesting to take to court to see if I could get my student loans discharged. $70k in student loans and not able to find a job in my field when I finished my BS and now still can't get a job in my field having finished my master's. I've been working in a trade since finishing my BS and well...its not looken good at all to get a job in my field of study with this economy and I have and keep trying.

To me it seemed a bit of a long shot but possibly worth a try. It is a bit of a financial hardship as I went through school to get ahead but the only thing I've gotten is more debt.

[Amy26]

I wish I could do that IBR thing but I make too much money .... lol. I guess I'll have to default back to my former plan...

Defer all my student loans till I die and then let them get written off.

[siestaguy]

I wish I could do that IBR thing but I make too much money .... lol. I guess I'll have to default back to my former plan...

Defer all my student loans till I die and then let them get written off.

And I thought I was the only one doing that. I took out my first student loan in 1990 and kept them deferred most of the time until 2008 (18 years) by getting a MBA and then enrolling in community college taking a couple classes online every semester. The Public Service Loan Forgiveness plan is the answer to my prayers. I have $186,000 in student loans, my income-based payment is about $550/month and the interest that accrues is about $1,100 per month. I've got 9 more years to go, but at that point, the balance will have grown to well over $200k and then it will be forgiven, tax-free too.

[katfzl]

I tried to have my student loans discharged but it didn't happen. I have been on a hardship deferment, and they sent me a letter today saying they want 30 years worth of payments of $890 a month. Just over $300k with interest. I am a special ed teacher who makes less than $36k a year. I'm not sure what to do...I am taking the letter to my attorney tomorrow. Someone I work with said once I have taught for five years(first year), I can have my loans forgiven. I pray that's true, because having this hanging over my head has me so depressed I am not sure if I can make it 5 years.

Look for the new program online or at the fed stud loan website regarding this. I believe it's called the loan forgiveness for public employees program. If you're a teacher, and you enroll in the income sensitive payment program and work/pay loans for 10 years, the rest of your debt is forgiven (this may depend on when your loans were taken out). It is what I plan to do. I'm also a spec ed teacher.

[loko2012]

[mermaids614]

I wish I could do that IBR thing but I make too much money .... lol. I guess I'll have to default back to my former plan...

Defer all my student loans till I die and then let them get written off.

Amy26, you posted the last post several months ago, so sorry about that. You said you are going to keep getting deferments? How? I had used a couple years of Economic Hardship deferment, In School at least half time Deferment.........then right before I filed Ch. 13 I had just started a forbearance, which was the only other thing I qualified for. From what I was told, you can only take each type of deferment a couple times. I timed-out of the economic hardship deferment. I am sick over these loans. I converted to Ch. 7 but that was the one thing that tempted me to stay in the Ch.13, because I wouldn't have to worry about these loans. I see that my loans have been sold to a different lender. So I wonder if the process starts all over. I timed out of all my deferments with one company, but perhaps the company they are with now will let me defer again. I attempted to call about them, but since I haven't discharged yet, they are with some sort of special department and they said they can't give me any information about it now. They said once I discharge, they will send the loans back to the lender for further processing. I was thinking I could take a Parent Plus Loan of $500 for my son who will start college this year, but I just read that the criteria calls for a credit check, and that any parent with a bankruptcy will be denied. The parent plus loan would allow me to re-consolidate, then defer payments until my son finishes school or falls to less than 12 hours per semester. I may apply any way to give it a shot. I'm rambling, but how are you able to get so many deferments because I feel I've run out of options.

[Amy26]

Hi Mermaids,

Basically what I meant by that was I haven't paid on any of my undergrad student loans since I took them out. Some of my private loans I've had to pay on but my federal undergrad ones I have not. How have I done this? Basically 2 things... When I took the loans with Sallie Mae they automatically give you a voluntary forebarance window. The loans I have gave me 5 year window I could apply for. I applied for them in 12 month chunks and they are basically always approved.

Then, I went back to school for my masters. So, when I'm in school at least half time, they get in school deferment... I've been doing my masters for about 3 years now. Then, I refinanced my loans with Sallie Mae. The 5 year voluntary forebarance window reset... so, now I have more time on them again. Hopefully in a few years I can refinance again.

[HHM]

Hi Mermaids,

Basically what I meant by that was I haven't paid on any of my undergrad student loans since I took them out. Some of my private loans I've had to pay on but my federal undergrad ones I have not. How have I done this? Basically 2 things... When I took the loans with Sallie Mae they automatically give you a voluntary forebarance window. The loans I have gave me 5 year window I could apply for. I applied for them in 12 month chunks and they are basically always approved.

Then, I went back to school for my masters. So, when I'm in school at least half time, they get in school deferment... I've been doing my masters for about 3 years now. Then, I refinanced my loans with Sallie Mae. The 5 year voluntary forebarance window reset... so, now I have more time on them again. Hopefully in a few years I can refinance again.

Nothing like fraud.