Old guy with Parent Plus loans and CH 7-help!

[Polydad]

Sorry not sure where this post went so re-posting....all thoughts appreciated.

My first post so not sure if this will end up on the right tread but let's try. I'm about to file myself for Ch 7 but I also want to try the hardship on my Parent Plus loans. I hope some of you experienced posters read and offer ideas/comments as it sounds like a lot to bite off but I seem to fit the profile.
So here's the raw detail:
- I'm single, 68 years old, healthy, unemployed, ex-corp computer industry salesman
- current income (and for a few years now) - $1600 for SS and $450 from a small pension plan
- less assets left than even exemptions cover- less than $10K; debt of nearly $150K of which $75 k is from the Parent Plus loans to get the kids through school as my world crumbled this decade.
- I can live frugally on the $2050 in So CA but nothing left for even medical, dental, gifts, family, fun,....etc.

So it seems like I meet the briefly stated requirements....I have paid along the way as long as I could, I can't live long enough to even pay the consolidated and extended monthlies, and if they made me pay the $600 a month I would be living under a bridge somewhere...chances of a job these days if bleak and at 68 it gets impossible very soon if not already.

So I keep searching for a case like me or comments, etc. but none so far....and if I'm dirt poor how could I pay $10K for help...I'm already doing the Ch 7 on my own!

Help please, thanks...

Gary

[Flamingo]

I am getting ready to rush out the door to work and not much time to post but wanted to ask you why your children have not taken over making the payments on your Parent Plus Loan and allowing you in retirement and on a limited income to keep making those payments? I am not certain if that loan would be dischargeable in a BK. Our other knowledgeable posters in here should be back with more info/guidance to help you out...

[Polydad]

More on Parent Plus SLs and Adversary filing

Flamingo, my mission in life was at to begin my kids on the best path possible, had them late obviously and they had some lesser loans themselves but would not let them, and they can't now anyway, to shoulder this issue....my ignorance and poor decisions created the problem so I'll deal with it. I do look forward to other thoughts/comments.

More over night thoughts now that I have found this forum. Certainly reading everything I can find so far it looks like no one ever wins but hard to resist a try. So can I follow - up with a few questions at the next level.

- Do I get to attach a brief argument stating my reasons with the Adversary form so that who ever reads the argument can make a go/no go decision? If everything automatically goes to a full blown court case how could someone who is another level in need below the BK requirement - poverty line, etc. - ever really pursue it? I can't really afford the basic BK7 effort (so doing this grunt work myself - I'm thankful already for this Forum!) so the $10K ain't gonna happen for a court case!

- It doesn't appear that the Adversary issue affect the rest of the BK7 decision in action and timing?

- So here's another major idea I ask comments on. If I go to the lender or servicer with an argument that I would and could try a significantly reduced loan and payment structure....let's say 20% of what is there today rather than just never pay forever and have the balance go to the moon and there costs mount, etc....would it be better to try that card before the filing of the Adversary and a decision is render on it or after if I lose on it?
A note here for all that I did trip over is that while forgiveness nearly always creates a taxable income on SLs it appears that if you take the forgiveness while still way under water assets to liabilites that there is a tax exception you can exercise so it is another factor for consideration as normally the tax issue moves your problem to the IRS and that is maybe the worst place to owe. Any experiences or comments?

Thx, Gary

[lrprn]

Here's an excellent discussion complete with links of what you are up against trying to discharge your Parent Plus student loans through a hardship discharge - http://www.moranlaw.net/studentloans.htm

Most bk courts (but not all) base whether you can discharge your student loans by claiming hardship on the 1987 Brunner case. Three criteria must be met:

(1) 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.

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

You have to bring an adversary proceeding in your bankruptcy case to see if you are able to discharge the student loans successfully.

Since the Parent Plus loans are government loans, another repayment option you may not be aware is the Income Contingent Replayment plan, a program that matches your student loan payments to your income. After 25 years whatever is left is discharged - more about the ICR program here - http://www.finaid.org/loans/icr.phtml

I also have the same question as Flamingo - since your children directly benefitted from the Parent Plus loans, is there a way that they can at least help you pay off these loans?

[Polydad]

Irprn, thx, I started a response earlier and it got lost I think so here goes again. I beleive you question about the kids was being generated at the same time I was answering that with my thougths so look back one please.

I did check the site on the Contigency Repayment Plan ans see this deep in the write up...."Only student loans may be included in the income contingent repayment plan. Parent loans, such as the Parent PLUS loan, are not eligible. Only loans that are guaranteed by the Federal government may be included. (Grad PLUS loans are not eligible for income-contingent repayment until July 1, 2009. However, consolidation loans that include Grad PLUS loans are eligible for income-contingent repayment, provided that the borrower did not enter repayment before July 1, 2006.)

Your thoughts ? am I mis reading it?

Any experiences out there by folks who have done a serious renego of the entire SL debt that I might be able to consider? Best done before or after I pursue and maybe lose the Adversary alternative?

Gary

[Polydad]

More base info on my Parent Plus problem

Helpers, since the initial responses I went and got the actual types of the loans at the NSLDS site and found that they are FFEL Consolidated and FFEL PLUS loans from the current lender US Bank ELT Ed Loans Inc. That appears to compound the likely hood that the Income Contingent plan isn't applicable in addition to the qyote I found that if not a student it also might not be a fit. Agree? So the alternative for the FFEL's is something

".....Income Sensitive Repayment (ISR) is an alternative to income contingent repayment for loans serviced by lenders in the Federal Family Education Loan Program (FFELP). It is designed to make it easier for borrowers with lower paying jobs to make their monthly loan payments. ...."

Not good when you look at it for an old guy with little income potential and not many options. Am I missing something/anything?

Thx, Gary

[Txgirl]

Please keep us updated. I have private student loans. I have been told it's pretty impossible to get any type of student loan discharged. A lady that had stage 4 cancer replied to my post that she was having trouble getting it done.

Good Luck!

[dingdong]

You will qualify for a William Ford Loan IF your loans are federally backed (they are) and your current lender DOES NOT offer an income contingent repayment plan.

SO... the question is, does your current lender offer an income contingent repayment plan?

If they do, apply for that plan.

If they dont, apply for a consolidation loan from William Ford.


I highly encourage you to spend a few minutes on the phone with William Ford and ask them if you qualify for a WFDL ( consolidation).

You will get information direct from the source who may/will be able to lower your payments significantly if you qualify.

You should probably call your current lender and ask them if they have an income contingent repayment plan first, that way you will have that knowledge when you contact WF.

If your current lender offers IC repayment, apply for that plan.

It is pretty simple and your questions will be easily solved by a couple phone calls.

IF you are in default already, it may qualify you for a WFDL based on that fact alone.

You have to call them to find out, or simply apply on the website and see what happens. There is no fee to apply.

[Polydad]

dingdong, thanks for the reply and detailed scenerio...I will get at it asap as it is such a key piece of the problem to get a new start that will work.

Let me ask - if I was ready with all the other info to file the 7 next week, would it make sense to get started and do the Adversarial Form also but mean time try to work the alternatives so that when the hearing comes up I have tried all that I could in case I haven't had success that I can live with? I can't see how it would damage the effort you've outlined but maybe I'm missing something. I do have a desire to get the thing started now that I am prepared in most ways and I want to begin the path back sooner than later.

And one miscellaneous general question that maybe I should ask elsewhere but since I'm typing - between the status of the assets and any debts spelled out in the initial filing and the meeting a month later what happens in the items change a little...like bank account goes up or down, some stocks change value up or down, cash in pocket changes, etc.----does that set of new numbers become the basis for what is used in calc the amount use with the CA wild card? Do they get/ask for a recent update of all assets and/or debt or do they stay with the original filing info (which will be accurate)? Hope that makes sense.

Thanks, Gary

[eddiep]

If you are filing bk, do not pay your loans off with your credit card!!!