Regardless of whatever anything says, your student loans are not discharged...

[markinva]

HHM: Thank you for clarifying things. I have no intention of misleading anyone. I'm posting just based on my own general experience with my case and my student loan. For example, the UST here will now not allow me to include my loan in my 13 payment plan, other trustees will allow that. As you point out, an AP must be filed as well; lots of technicalities that must be handled by the attorneys. The levels of stress indicated by everyday folks in these postings compels me to share and post - hoping that it will help somewhat.

[HHM]

Treatment of Student Loans in BK is highly dependent on your individual case and if U are filing 7 or 13, the skill of your attorney, and what the trustee decides. In most cases, they have to be paid back sooner or later but in some rare cases they might be discharged.

I appreciate the contribution, but that is just such a misleading statement. None of what you said has ANY bearing on whether student loans are discharged. Student loans are simply non-dischargeable unless the debtor can prove one of two exceptions, either
1. The student loan is not really a student loan
2. Paying the student loan would create an undue hardship on the debt.

Doesn't matter if the debtor filed chapter 7, 11, or 13, doesn't matter which district you are in, doesn't matter which trustee you have.

In order to get the student loans discharged, the debtor MUST file an adversary proceeding. There is no accidental discharge.

That doesn't mean bankruptcy cannot be part of an over all strategy to solve a person's debt issues related to student loans, but I think what you stated is entirely misleading and misunderstands the issue, sorry.

[markinva]

Treatment of Student Loans in BK is highly dependent on your individual case and if U are filing 7 or 13, the skill of your attorney, and what the trustee decides. In most cases, they have to be paid back sooner or later but in some rare cases they might be discharged.

[Jf24]

Will be filing in the next few months. Have 2 small private loans with Citi and Salli (5,000 and 8,000) and a larger Federal one. I stopped paying them last month, along with the credit cards. Citi and Salli are calling. The Fed will soon I guess. Do I tell them I will be filing? Do I have a certian amount of time before they start garnishment? Plan on filing mid Jan to Feb some time.

[markinva]

Filed 13 Oct 2011. 341 was continued to March 2012 - The court notified US Dept Of Ed of my BK filing; my federal loan was quickly put into "administrative forbearance" for six months by the Ed Dept; I did not request it. I was told that I could make voluntary payments if I chose but that payments would be "held", not applied to the loan. As far as I know at this point, the loan will not be included in my 13 payment plan so I guess that interest will accrue on my large student loan for 5 years. Just doesn't seem right to me; most are aware that Fed student loans are rarely dischargable but the Trusteed treat them as a different class of unsecured debt.

[aquavir]

Tora:

As this happened last fall I'm sure you have now resolved this, but I wanted to add my experience to this discussion as a warning to others. Some PRIVATE student loans (I had one with Citibank) automatically default if you file BK. I had NEVER even been late on a payment (it was automatic from my bank) and they stopped taking the money out when the BK was filed and (unlike Sallie Mae who just sent me a "it's time to start paying now" when the BK closed) I got a call from a collection agency asking for the whole amount of the Citi loan about a month after my BK closed. I worked out a payment plan with them and am soon going to offer them a settlement to get done with it. Anyway, I just wanted to throw this out there for anyone who is wondering how the whole student loan thing will turn out. It seems that your Stafford loan will be fine (just put on hold and then resumed...my consolidation interest rate was unaffected), but any private loans may default automatically. And, of course, none of the debts are discharged...

[Guardiands]

Just a comment regarding Espinosa.

Putting a student loan in your Chapter 13 plan could get it discharged. If it goes through without an objection the loans will be discharged. Plans are binding and final orders, and the court has subject matter jurisdiction over student loans so you aren't going to get it vacated as void under FRCP 60(b)(4).

But I suggest not putting your loans in your Chapter 13 plan hoping that it will go unnoticed, they are paying attention and sanctions are a real possibility.

So I would say the sticky is very sound advice. No adversary proceeding, no discharge of student loan. Great rule of thumb.

At least that's how I understand it all.

[KeithDoxen]

Tora:

The representative you spoke with is technically correct. Your loans are considered to be "in bankruptcy" by the lender until the case is complete. I think they do this just in case you file an AP to discharge the loans. When I filed my Ch 7, my loans too were placed in "bankruptcy forbearance" until I was discharged. Well, all except for one lender, who decided to let the clock run out so that my loans defaulted while I was in bankruptcy.

The point is, this is pretty standard operating procedure for lenders. The good news is that as soon as you're discharged, the lender will move to put your loans back into their rightful status. Sometimes it takes a few weeks but usually not longer than that. It sounds like you'll be discharged well before you need financial aid for school next fall. It's really just an administrative hassle that you're dealing with.

[Tora]

I know they aren't, but the company doesn't believe me...

Sorry to resurrect an old thread, but I have a few questions about this.

I am in limbo with my current bankruptcy - chapter 7 with federal exemptions, had the 341 meeting, waiting for discharge. I am planning on attending college next fall, so I called one company that holds a promissory note to some my old student loan from 5 years ago (that I am current on, making payments after a forebearance). I was trying to ask if the note was still active, so I could extend the line of credit on it. All the service rep would tell me was that my loans showed a bankruptcy status and that I needed to discuss it with my financial aid office. I told her repeatedly that I did not declare my loans, that I didn't qualify for undue hardship and hadn't planned on it anyways, but she insisted that they were in bankruptcy and she couldn't give me any more information. I know she is factually wrong, or at least everything I have read and sen tellls me she is. My own bk lawyer has affirmed that I am not pursuing having my SLs discharged. So what gives?

Considering that I am not even in college at the moment, I asked if I was supposed to talk to the old college that I was attending when I received the student loans, or the new college that I am not even a member of yet. She said to talk to the new college. She never explained why, and with all my might I still cannot think of a reason they would know more.

I did call the financial aid office, and they were very confused, but they took up the challenge. Haven't heard back from them yet.

So what am I supposed to do? Call my SL lenders and reaffirm the debt, even though they aren't in bankruptcy anyways? Call the company that runs my SLs and demand to talk to someone who isn't an idiot?

Why is this such a common problem?

Any help or insight would be greatly appreciated.

[tkcoins]

Can any tell me I file for chapter 7 in 1997 had a student loan issued in 1994 I hope it was discharged help me understand

[Dst1]

It was clear to me that something wasn't right.
.

Something still isn't right. WHY did they cancel your loan? Banks don't cancel SL willy nilly. How do you know it's not merely an accounting error?

BTW, this question deserves it's own thread. It really shouldn't be in this thread.

[Dst1]

I very much understand Espinosa. It it clearly distinguishable regarding timing but the fact remains that if the Supreme Court signs off on it, then the result will still be a discharge without an AP.

It's true that if the SC signs off on it then then the result will still be a discharge without an AP for this case only. There was not a single justice at oral that felt the underlying decision by the judge was correct. Not a single one.

The question that remains, however, is what to do about it at this stage. I think it's an interesting case because it's going to be curious to see where the SC dumps the responsibility. None of the solutions are particularly inviting from a policy point of view.

But in the big picture Espinosa changes nothing. It's merely an error correcting case.

[amarchefka]

1099-C from Key Bank "Cancellation of Debt"

I have a question related to the discharge of student loan debt. I received a 1099-C from a student loan company stating that they had canceled my debt about a month ago. Up until this point I had no idea that they were going to do this and I was in negotiation with them to start repayments (after they had canceled my debt, but I didn't know this at the time). Every person I spoke with on the phone kept asking me "have you settled your debt with us, we can't find your account?" It was clear to me that something wasn't right.
When I received the 1099-C I filed my return and also filed for insolvency. Today I got a letter from my student loan company apologizing for the error, but they didn't mean to send me the 1099 and that I should disregard it. I've already filed, claimed insolvency and am ready to move on. At this point should I assume that Key Bank has canceled my debt and are also trying to collect on it as well? I'm convinced that if I had not been calling them to try and set up payments after going into default that they would not have claimed that it was an error. After I've filed my taxes can they still come after this money? (I have not filed bankruptcy and understand that student loans cannot be discharged in BK). Thanks in advance for your advice.

[adgardine]

First, the date of this thread start is April 2009, that decision came down in Dec 2009.

Also, the underlying chapter 13 case for the decision was filed in 1994, pre-2005 BAPCPA. Second, the debtor in that case actually paid his student loan "principal" in that case, but proposed to discharge the interest. That is actually consistent with Pre-2005 BAPCPA rulings, however, there have been no Post BAPCPA rulings along these lines.

So, perhaps you should get your facts state before saying the information is inaccurate.

Nevertheless, it will be an interesting case for the Supreme Court.

I mean no disrespect. But if you are going to have a sticky (the first one in the student loan section) that basically reinforces something that is currently at issue then maybe move it, modify it, or don't get your back up when someone comes along to help out.

I very much understand Espinosa. It it clearly distinguishable regarding timing but the fact remains that if the Supreme Court signs off on it, then the result will still be a discharge without an AP. The very reason the Court is hearing it in the first place is because it invokes DP.

[HHM]

First, the date of this thread start is April 2009, that decision came down in Dec 2009.

Also, the underlying chapter 13 case for the decision was filed in 1994, pre-2005 BAPCPA. Second, the debtor in that case actually paid his student loan "principal" in that case, but proposed to discharge the interest. That is actually consistent with Pre-2005 BAPCPA rulings, however, there have been no Post BAPCPA rulings along these lines.

So, perhaps you should get your facts straight before saying the information is inaccurate.

Nevertheless, it will be an interesting case for the Supreme Court.