A Successful Student Loan Discharge, Totality of Circumstances

[backtoschool]

That is not correct. There are different KINDS of student loans. Federal student loans, or those federally backed, are regulated by the federal government. Student loans that are private in nature, where there is no government backing, are subject to the same state statute of limitations laws as any other type of debt.

I have done extensive research on this and know what I'm talking about. If you have facts to refute me, please present them.

You are not correct KeithDoxen. Student loans, whether private or federally backed, are regulated by the Federal Government. All student loan providers receive some assistance from the Federal Government, even private loan providers. That is why the loans cannot be discharged. Now if you put your tuition on a credit card, or took out a personal, non-education loan and then bk'ed that is not a student loan and so would be subject to different rules. But if the loan is a student loan, then it is regulated by the Federal Government.

[KeithDoxen]

You are not correct KeithDoxen. Student loans, whether private or federally backed, are regulated by the Federal Government. All student loan providers receive some assistance from the Federal Government, even private loan providers. That is why the loans cannot be discharged. Now if you put your tuition on a credit card, or took out a personal, non-education loan and then bk'ed that is not a student loan and so would be subject to different rules. But if the loan is a student loan, then it is regulated by the Federal Government.

We are not talking about whether or not the loans can be dischargeable in bankruptcy here. Of course they are not. That fact has been well established. The issue here is whether state statutes of limitations apply to student loans. What you'll find if you research the issue is that loans that are made or guaranteed by the federal government are not subject to state SOLs, but state SOLs do apply to student loans that have no government backing. There have been many successful cases where student loan companies have sued over private student loans and the court found the suit time barred because the SOL had run.

Again, the issue in question here is not bankruptcy but the statute of limitations, and which SOL would apply in which state. Bankruptcy and SOL are two different issues, governed by different laws.

This language that you guys are using when you say student loans are "regulated by the federal government" is ambiguous and misleading. Lots of things are "regulated by the federal government." The only thing that matters is what the specific federal law says on the specific issue we're talking about. There is no federal law that says that private student loans are not subject to state statutes of limitations. Therefore, private student loans are subject to state statutes of limitations.

If someone disagrees with me, they need to produce the law that shows that I am wrong.

[HHM]

That is not correct. There are different KINDS of student loans. Federal student loans, or those federally backed, are regulated by the federal government. Student loans that are private in nature, where there is no government backing, are subject to the same state statute of limitations laws as any other type of debt.

I have done extensive research on this and know what I'm talking about. If you have facts to refute me, please present them.

Actually, why don't you show us the cases you found so we can learn.

The real problem is that there are very few, truly "private" student loans. The 1998 Higher Education Resources and Student Assitance Act pretty much "preempted" (since you want to use technical term) state law when it comes to the bulk of student lending.

But let's be clear, there is NO statute of limitation defense for collection of loans, offsets, grants, or over payments that are in someway related to HIGHER EDUCATION RESOURCES AND STUDENT ASSISTANCE . 20 U.S.C. § 1091a(a)

http://www.law.cornell.edu/uscode/20/1091a.html

The problem is that the definition of what is excepted from the SOL is broader then anyone would expect.

In any event, even if you are right, there is no easy administrative way to enforce it. The borrower is still going to need to go to court.

[KeithDoxen]

Actually, why don't you show us the cases you found so we can learn.

The real problem is that there are very few, truly "private" student loans. The 1998 Higher Education Resources and Student Assitance Act pretty much "preempted" (since you want to use technical term) state law when it comes to the bulk of student lending.

But let's be clear, there is NO statute of limitation defense for collection of loans, offsets, grants, or over payments that are in someway related to HIGHER EDUCATION RESOURCES AND STUDENT ASSISTANCE . 20 U.S.C. § 1091a(a)

http://www.law.cornell.edu/uscode/20/1091a.html

The problem is that the definition of what is excepted from the SOL is broader then anyone would expect.

In any event, even if you are right, there is no easy administrative way to enforce it. The borrower is still going to need to go to court.

The only way to enforce an SOL defense is if the creditor sues you, at which point you move to dismiss based on SOL grounds. You're right that there's no easy way to get the creditor to go away without actual litigation occurring on this issue.

I will do a separate post on SOL law as it applies to student loans. You are reading 1091 too broadly. Private student loans are subject to state SOL laws. It doesn't matter that they are "related" to higher ed expenses. Wait for the post and I will show you.

[doni49]

http://www.mow.uscourts.gov/opinions...rman/marie.pdf

I hope the link works to the case. This case is in the 8th circuit.

When I click on the link, I get a "Page not found" message. I looked through Federman's decisions and found Marie Vs. Citibank which is in fact a case involving a student loan.

Here is the link that I was able to use to get to the page. I'm reading through it now. I'm personally interested in this particularly because I will be filing in this very district and I have student loans that have been chasing me for years.

Thanks for posting it.

http://www.mow.uscourts.gov/bankruptcy/opinions/federman/marie.pdf

[pippen2012]

If you have a public service career the loans will be forgiven after 10 years of payment at the standard rate but not the income contingent rate

[DavidMartin]

Student loan is been an issue now a days and i am glad to see some post related to this.thanks a lot.

[dollydio]

Disability income is NOT exempt from garnishment... I know this all too well, because 2 months ago, the Dept. of Ed. began taking $150 per month out of my SSDI (Social Security Disability Income) monthly benefit - which was a small amount to start with. The last couple of years, many people who receive SSDI, are in the same boat as me-getting their disability garnished.

Many people believe Disability is exempt from garnishment - well, that depends on where your disability income comes from. In my case, I worked all my life before I filed for disability. The amount I receive per month, is based on what I earned during my years of continuous employment. This is what I receive and it is called SSDI (Social Security Disability Income).

Then, there are people who collect SSI - SSI is totally different. SSI stands for Supplemental Security Income. This is a program administered by the Social Security Administration, but the monthly amount for SSI recipients is not based on their work record earnings... These individuals filed for disability, but did not have enough years of employment, to earn social security work credit earnings. So, they get a smaller amount per month, than SSDI recipients do, as their monthly checks are based on need, rather than past work earnings. The amount of SSI is the same amount in all 50 states-right now, I think it's about $750 per month.

SSI is a need-based program; whereas SSDI is a work insurance type of program. The reason I gave that little speech on the difference between the two, is due to this: you could have billions of dollars in student loan debt, but if you get disability through the SSI program, they can never garnish even one red cent.

However, if your disability is through the SSDI program and based on your work credits, the Dept. of Ed. can garnish your disability, each and every month, literally until the day you die - and yes, this continues past your retirement age. I know, because I'm living that very thing, right now. So, I just wanted to clear up the confusion many people have about believing all disability income is exempt from garnishment... it's simply not true - unless you receive SSI.

[tobee43]

dollydio, first, welcome to the forum!

i think you should read this.

first kanas is ONE OF THE ONLY states if not the only state in this country that does this.


Kansas Exemptions

Although the federal bankruptcy code provides a list of exemptions, these exemptions are not available in Kansas. Kansas law requires you to use the exemptions found in state law -- not the U.S. bankruptcy code.
Federal "non-bankruptcy" exemptions are available

However you are entitled to use so-called federal "non-bankruptcy" exemptions in addition to your state law exemptions. Non-bankruptcy exemptions are those found provisions of U.S. law that are not part of the bankruptcy code.

The four most significant non-bankruptcy exemptions are for

Wages (a general cap on what percentage of your wages can be garnished),
Social Security benefits,
Civil Service benefits,
Veterans Benefits

Other so called "non-bankruptcy" exemptions mostly deal with various benefits to government and military personnel, with a few odd laws regarding specially-regulated labor markets such as railroad workers, seamen, and longshoremen.


http://www.legalconsumer.com/bankrup...-law.php?ST=KS


this is what the "general" bk rules are, that is why your post may be confusing to some. most states follow many of the bk codes where in kanas you are in the wild wild midwest. what i have listed below as to how it usually works in other states. NOT kanas.


Social Security Benefit Garnishment Rules


Dec 10, 2013

"When Creditors Are Allowed To Garnish Social Security Benefits

Bills Bottom Line:

It is against the law for a judgment-creditor to garnish your Social Security benefits. However, if you leave too much in the bank or credit union account where the Social Security Administration direct-deposits your benefit, the "excess amount" is vulnerable to what lawyers call a levy or account garnishment.


Levy / Account Garnishment of Your Social Security Direct Deposits

Your Social Security income is protected from a private creditor’s garnishment. It is smart to open a separate, dedicated account or sub-account for the Social Security Administration’s direct deposits. Ask your bank or credit union to add a note to this account indicating it contains Social Security benefits, only. Do not deposit funds from other sources into this special account. Commingling exempt funds with non-exempt funds may lead to all of the funds becoming non-exempt.

Judgment creditors may not remove money deposit by the Social Security Administration from your bank or credit union account. Some states call this action account levy and others call it account garnishment. However, there is a limit to how much is exempt from levy. When your banks or credit unions receives a levy order, it must look back at your last two months of deposits and exempt two months-worth of money. Also, your bank must give you a notice of its actions, and if your state law requires it, time to dispute any funds removed from your account (CFR §212).

Your state may exempt even more than two months of Social Security benefits from an account levy. Maryland, for example, allows its residents to exempt $6,000 in their bank or credit union accounts. See the Bills.com resource Collection Laws & Exemptions to learn some of the exemptions for each state.
Garnishment of Other Federal Benefits

Many other federal benefits are exempt from garnishment, including:

Supplemental Security Income (SSI) Benefits
Veterans’ Benefits
Civil Service and Federal Retirement and Disability Benefits
Service Members’ Pay
Military Annuities and Survivors’ Benefits
Student Assistance
Railroad Retirement Benefits
Merchant Seamen Wages
Longshoremen’s and Harbor Workers’ Death and Disability Benefits
Foreign Service Retirement and Disability Benefits
Compensation for Injury, Death, or Detention of Employees of U.S. Contractors Outside the U.S.
Federal Emergency Management Agency Federal Disaster Assistance

For more information about the various options available to consumers who are struggling with debts, visit the Debt Help section at Bills.com. See the Bills.com article Wage Garnishment if you do not receive Social Security benefits.

Bills Action Plan:

A judgment-creditor may not garnish your Social Security benefits, and two months-worth of benefits are exempt from account levy. Consult with an lawyer licensed in your state to learn more about your vulnerability to creditor execution in case of any judgment entered against you. An lawyer will explain the risks of having outstanding debts, and help you formulate an asset protection plan suited to your individual circumstances.

The federal government can take a piece out of your Social Security benefit, but a private judgment-creditor may not. According to the Social Security Administration Web page Garnishing Social Security benefits due to a debt:

“If a creditor other than the federal government tries to garnish your Social Security benefits, inform them that such an action violates Section 207 of the Social Security Act (42 U.S.C. 407). Section 207 bars garnishment of your benefits. It can also be used as a defense if your benefits are incorrectly garnished. Our responsibility for protecting benefits against garnishment, assignments and other legal processes usually ends when the beneficiary is paid. However, once paid, benefits continue to be protected under section 207 of Act as long as they are identifiable as Social Security benefits.”

Therefore, a creditor with a credit card, mortgage, private student loan, or auto loan debt may not garnish your wages. The Dept. of Education and other federal agencies may garnish (called “off-set” by the government) Social Security benefits for delinquent federal loans. There are six instances where the federal government may garnish Social Security benefits, including:

Garnish benefits to enforce child support or alimony obligations — Section 459 of the Act;
The Internal Revenue Service can levy against benefits to collect unpaid Federal taxes — Section 6334(c) of the Internal Revenue Code;
The Internal Revenue Service can collect taxes due by levying up to 15% of a monthly benefit until the debt is paid;
The Internal Revenue Service allows beneficiaries to have a portion of their check withheld to satisfy a current year Federal income tax liability — Section 3402 (P) of the Internal Revenue Code; and
Other Federal agencies can collect money from benefits to pay a non-tax debt owed to that Agency — Debt Collection Act of 1996 (Public Law 104-134 (PDF)).
Under the Mandatory Victim Restitution Act, certain civil penalties provide the right to garnish benefits under 18 USC 3613.

The Social Security Administration Web page Garnishing Social Security benefits contains the exceptions I just mentioned.
How Much May the Government Off-Set From Your Social Security?

The government may off-set Social Security retirement benefits and Social Security disability benefits, but not Supplemental Security Income as reimbursement for student loans. The government may not off-set an amount leaving you with benefits less than $9,000 per year or $750 per month. It may not off-set more than 15% of your total benefit."

http://www.bills.com/social-security-garnishment/

AND:
Compilation of the Social Security Laws



Sec. 207. [42 U.S.C. 407] (a) The right of any person to any future payment under this title shall not be transferable or assignable, at law or in equity, and none of the moneys paid or payable or rights existing under this title shall be subject to execution, levy, attachment, garnishment, or other legal process, or to the operation of any bankruptcy or insolvency law.

(b) No other provision of law, enacted before, on, or after the date of the enactment of this section[90], may be construed to limit, supersede, or otherwise modify the provisions of this section except to the extent that it does so by express reference to this section.

(c) Nothing in this section shall be construed to prohibit withholding taxes from any benefit under this title, if such withholding is done pursuant to a request made in accordance with section 3402(p)(1) of the Internal Revenue Code of 1986[91] by the person entitled to such benefit or such person’s representative payee.


my point here is what is happening to you per sa it NOT the norm for numerous other states or under the general US bk codes. moral of the story, move before you decide to file bk in kanas and wait out the residency requirement in your new state. (we did that, but were not from kanas).

[tobee43]

oppppppps...so i forgot to add the most important point. it says SSI is an exemption to the rules in kanas so something is very very wrong with them taking your funds. “disability” ss is still considered under the protection of the Social Security Act. from my understanding, please someone correct???

[dollydio]

Tobee43, thank you for your input. What you wrote here about the Social Security garnishment rules IS absolutely correct. The reason why some disability recipients can get garnished (SSDI recipients, such as myself), as well as why the monthly benefits SSR recipients receive (Social Security Retirement recipients) can also be garnished by the government - yet SSI recipients are totally exempt from any type of garnishment at all - lie in the differences between these three programs.

The confusion is understandable – for one thing, there’s too many “ssss”, when you’re talking about SSI, SSDI, and SSR, right?? - and to compound the confusion even further, you then encounter even more S’s, by way of SSA (Social Security Administration), who administers all 3 of those programs!

Trying to make these muddy waters less murky, here goes: SSDI and SSI are the same in that recipients in both groups are disabled; whereas SSR (retirement) recipients are not disabled. SSDI and SSR recipients are the same in this one respect: both of these 2 groups have worked enough in their lifetimes that they have paid considerable FICA/Social Security taxes to the government; whereas SSI recipients have not paid much, if any, social security taxes to the government, as they have either not worked at all, or they have not worked much.

Why does that matter? It matters because of the way the recipients of those programs are viewed by the government/powers to be – as these views result in the laws which declare which of these groups are exempt/not exempt from attachments to those funds from debt.

SSR and SSDI are both based on work credits (taxes you’ve paid to the government when you were employed). Whereas SSI is based on financial need - not on work credits/taxes you’ve paid in. If you receive SSI disability, you’re getting a smaller disability check than an SSDI recipient does, and you’re getting that check based on financial need – the amount SSI recipients receive is less than what SSDI and SSR recipients receive, (but many times not much less), since SSI is needs-based, and not based on work credits/taxes you’ve paid in.

That is why SSA, who administers all 3 programs, terms SSI as a “needs-based program” – and why SSA terms both SSDI and SSR, as “work insurance programs”. SSA used to refer to SSI as a welfare program, but that’s usually not said now (“needs-based” is more politically correct). SSI is not the only program where the funds of the recipients are exempt from attachment of any kind - People who receive funds from any needs-based program that comes from federal assistance program funding (even if it’s their state who administers the federal program), such as AFDC-Aid to Families of Dependent Children (which also used to be referred to as welfare), are also exempt from ANY attachment of those funds – whether it’s state/civil/criminal/private/federal/child support debts.

It’s a “no can touch this” when it comes to any attachment/levy/garnishment at all - IF the source of your income in that account, originates from a needs-based federal program. Doesn’t matter what kind of debt it is, either. SSI recipients who owe bazillions in student loans, or in back child support, or have federal crime debt, are exempted from having one penny of their SSI disability checks garnished for those debts, too (which frankly, ticks me off to no end). Like I said, “no can touch this”…

But … what about what you wrote, about Social Security being exempt from garnishment? Is that not true? Well, that’s absolutely true – it’s just that you’re not exempt from ALL types of garnishment, if you’re SSDI, or SSR. Here is where all 3 groups – SSI, SSDI, and SSR – are exactly the same when it comes to being exempt from garnishment –all 3 groups are exempt from attachments due to any state, civil, or private debt you owe. SSI is exempt from those debts, but - it’s also exempt from garnishment of any kind - no matter what the debt is.

[ValleYum]

Great info here about federal levy/garnishment as it applies to SSA administered programs:

https://www.irs.gov/pub/irs-pdf/p4418.pdf

[tobee43]

valle opp lives in kanas which does not "honor" federal bk codes in many situations such as levies and or garnishment in many cases. they called them "non bankruptcy" exemptions that most other states and the federal filings exempt. kanas rules since do not follow nor honor federal bk codes or guidelines in many cases.

dolly: my understanding is SSI SSDI and SSR are all cover under the umbrella of the Social Security Act. and, yes, i understand if the debt is federally or maybe in your case "state" exempt the can garnish. so i'm "guessing in your case it's a federal or as you stated child support or one of the exceptions.