Filing Chapter 7 in 2 weeks - should we file for adversary proceeding for SL debt?

[cwilliams]

My dh and I will be filing Chapter 7 on credit card and consumer debt on August 10. Even then, we will still have about $40K of student loan debt on about a $25K annual income. We are planning to move and dh is looking at getting a better paying job, but we are seriously considering filing the adversary proceeding and trying to get some of the loans discharged. I am currently self employed and although I'm trying to grow my business I make less than $10K annually by myself.

The loans are in my name. There is about $12K in federal loans and the rest are private student loans. The federal loans are in deferment until December of this year and the private ones will be out of deferment soon, but I can ask for another 6 months. However, I was told they can only be deferred for one year total which means come January I have to pay something on them.

They do offer payment plans. However, they wanted like $300 a month and the federal loan wants $300 month and we can't pay that much.

Has anyone tried to file the adversary proceeding and how did it go? I did read the case linked in the sticky where her loans were cut drastically. If I could have mine maybe cut in half that would be more reasonable and we would be able to pay them easier based on our income.

[cwilliams]

We will be talking to the attorney on Monday about filing the adversary proceeding. I just looked at my statements online and we have $65K in student loans. Our income last year was about $25K. There is no way we can pay all of that.

[Amy26]

Just FYI ... the loans will come out of deferrment status when you file. All of mine were deferred into next year and I even had some that were deferred until 2010. They have all been listed now with a due date of August even though I'm in middle of bankruptcy. I'm not sure if I'm allowed to go back into deferrment afterward or not.

[cwilliams]

That's not good, Amy. There is no way that I can pay anything toward these loans at this point.

Our appointment was changed to Tuesday morning. They are checking on the adversary proceeding.

[Amy26]

Well you're not permitted to make payments while your bankruptcy is pending. So, even though the loans have become due right now... I will not be paying on them until my bankruptcy is over. And as I said at that point, I'm not sure if I'm allowed to do deferals again or not. I certainly hope so...cause I don't feel like paying on them just yet.

[cwilliams]

We were told that our state is an all or nothing state - either they all get discharged or none. And the attorney said he's never seen one succeed. He said to win a SL discharge you have to have no arms, no legs and be on life support. So I guess we'll owe about $70K when all is said and done.