AP for 220K in Private Student Loans

[justbroke]

In re Nys, 446 F.3d 938, 941 (9th Cir. 2006)
Second prong of the Brunner test "does not require an exceptional circumstance beyond the inability to pay now and for a substantial portion of the loan’s repayment period."

This is the problem with being pro se, and even many attorneys make the same mistake. They jump to the "conclusion" and find that the judge awarded exactly what they are looking for. The problem is, that the attorney, or untested pro se litigant, failed to read the details for the case. I also ask you to re-read what I posted. I stated that short of a disability, it would be near impossible for an able-bodied twenty-something to get a discharge of student debt. As a matter of fact, let me quote myself --

Without a disability, the case would be difficult at best.

Please go re-read In Re Nys. You may want to pull up the entire adversary in PACER and read all the relevant papers filed. To summarize my earlier point, on age being a factor, you'll see that Nys was 51 at the time the complaint was filed. A far cry from 25 and she was expected to retire at age 65.

I always find it interesting when an attorney uses a case as persuasive or as precedence, but fails to see that the facts of the case actually give the judge to reason to deny under that citation.

I do wish you luck, but I wouldn't want to be a 25 year old (debtor) citing In Re Nys as "persuasive" or that the debtor met any of the other tests, including that the debtor has "tried" to repay the loans.

(Note: I also suggest you read In Re Nys, from the actual AP docket. Find out what actually happened on remand. Still, with the age of Nys versus someone fresh out of college... it would be hard to convince me. And please, you don't have to convince me.)

[HHM]

More power to you K10, but you have a greater uphill battle than I think you realize.

It is sort of like trying to do an Offer In Compromise with the IRS. One of the things looked at by the IRS is the remaining statute of limitations on the tax debt (the SOL is 10 years). If you try to do an OIC in year 1, you better be completely destitute to have any shot of getting an OIC approved. Same thinking applies to student loans. If you are just emerging from school and seeking a "hardship" discharge is a tough sell no mater how you slice it. The good news is, you can always bring a case in the future if your circumstances change. Many courts will allow the AP to be dismissed without prejudice and allow you to re-bring the action when new facts come to light (or if 8 years passes, you can always file a new BK and bring the AP under that BK).

[jadams]

I am curious what the proceeds of $220,000 in private loans (in addition to government loans) went towards.

The large dollar amount makes me think you either have an upper level degree (that one would normally associate with a higher paying career), or you made liberal use of private loans to cover "additional expenses" and those loans include far more than your tuition and average expenses.

Either choice having some impact on how you would position your AP case. (The first needing you to be able to address why you don't have a different job, the second have you working the angle that at least some of the loans might not be qualified.)

Please know I'm not attempting to criticize, just looking for clarification because it may impact how you approach things. I made some bad decisions with student loans too.

I can't find it now, but in my research I did find some case law that suggested (in addition to lots of other things) showing that your private student loan lender gave you amounts far in excess of reasonable school expenses (and didn't require certification and such from your school) would be a significant step on the road towards dischargability.

I know when I took out my private loans, TERI was still around and very liberal on what they allowed lenders to calculate as the cost of attendance and how they encouraged borrowers to use the funds.

[k10]

I am curious what the proceeds of $220,000 in private loans (in addition to government loans) went towards.

The large dollar amount makes me think you either have an upper level degree (that one would normally associate with a higher paying career), or you made liberal use of private loans to cover "additional expenses" and those loans include far more than your tuition and average expenses.

Either choice having some impact on how you would position your AP case. (The first needing you to be able to address why you don't have a different job, the second have you working the angle that at least some of the loans might not be qualified.)

Please know I'm not attempting to criticize, just looking for clarification because it may impact how you approach things. I made some bad decisions with student loans too.

I can't find it now, but in my research I did find some case law that suggested (in addition to lots of other things) showing that your private student loan lender gave you amounts far in excess of reasonable school expenses (and didn't require certification and such from your school) would be a significant step on the road towards dischargability.

I know when I took out my private loans, TERI was still around and very liberal on what they allowed lenders to calculate as the cost of attendance and how they encouraged borrowers to use the funds.

The latter is indeed the case, but spread over multiple lenders

[dumpinmydebt]

Here's are the issues I see with this:

If they garnish 10%, that would be $5000. That would leave you $45,000(not including taxes). Let's take out $9000 for taxes. That's $3000 a month. That's plenty of money to live on. My husband and I live on $2400 per month. That's 2 of us on $2400 per month. We used to live on $2k a month. Sure, you can't live a life of luxury, but you can pay and still have money for necessities and a little savings.

You are young. You have plenty of years ahead to make money to pay on this debt. If they garnish your wages for the next 50 years (and assuming you stay at a $50k salary for the next 50 years), they'll make $250,000.

Why do you think they will let you discharge part of a debt when they can clearly make a case that you can pay for the entire amount? You need to make a case that you absolutely cannot in no way pay off this debt, and I'm sorry but I just don't see it.

I agree that without having a serious disability that makes you unable to work, then it's nearly impossible. That being said. Good luck. If you can pull it off, maybe some other people will be able to as well.

[k10]

Here's are the issues I see with this:

If they garnish 10%, that would be $5000. That would leave you $45,000(not including taxes). Let's take out $9000 for taxes. That's $3000 a month. That's plenty of money to live on. My husband and I live on $2400 per month. That's 2 of us on $2400 per month. We used to live on $2k a month. Sure, you can't live a life of luxury, but you can pay and still have money for necessities and a little savings.

You are young. You have plenty of years ahead to make money to pay on this debt. If they garnish your wages for the next 50 years (and assuming you stay at a $50k salary for the next 50 years), they'll make $250,000.

Why do you think they will let you discharge part of a debt when they can clearly make a case that you can pay for the entire amount? You need to make a case that you absolutely cannot in no way pay off this debt, and I'm sorry but I just don't see it.

I agree that without having a serious disability that makes you unable to work, then it's nearly impossible. That being said. Good luck. If you can pull it off, maybe some other people will be able to as well.

In the short term that may work. But think about the long term: never having a chance to acquire assets, constantly worrying about levys...How is one supposed to live a life like that?

[dumpinmydebt]

In the short term that may work. But think about the long term: never having a chance to acquire assets, constantly worrying about levys...How is one supposed to live a life like that?

Oh I most certainly agree that it would suck. But you'll need to consider the fact that the loan companies don't care about that. It's all business in this situation. They feel no pity.

[backtoschool]

The official poverty line is usually the standard for hardship. If a person is not below the poverty line and has reason to believe that their income is going up in the next 30 years and not down, then it will be very difficult to prove hardship.

Also, as to the large amount of the loans and using loans for non-educational expenses, if a promissory note was signed stating that the loans would be used for educational purposes and legitimate living expenses, and then the loans were used for some other purpose (ski trip to Aspen for example) that is not a reason for discharging the loans, since miss-using the funds is the borrower's voluntary choice and goes against the signed promise to not miss-use the funds.

[freedomnow7]

K10 and others on this board - I asked a similar question about a charged off Chase loan on another forum (outside of BK Forum). I was contacted by a debt collection agency during my BK. When I told them the matter was in BK, they immediately hung up the phone.

Now, when I asked this question on another board, it had 11 replies, but mostly from legal eagles going back and forth about the legality of arbitration and private student loan debt. So maybe the OP and the others can benefit from this question, because I would sure like to know myself (they never quite answered my question).

When I signed for the loan, included was an Arbitration clause, which said that I had a right to elect arbitration for any legal issues concerning the loan. I would like to know what exactly is arbitration and how it applies to a charged off student loan. K10, you may have had an arbitration clause as well. I don't see where I can attach the PDF to my post but if anyone would like to see the actual clause itself, PM me.

Anyway, here is the link to the discussion if it may help anyone, especially the OP http://www.debtorboards.com/index.ph...c,12896.0.html

[KeithDoxen]

Also, as to the large amount of the loans and using loans for non-educational expenses, if a promissory note was signed stating that the loans would be used for educational purposes and legitimate living expenses, and then the loans were used for some other purpose (ski trip to Aspen for example) that is not a reason for discharging the loans, since miss-using the funds is the borrower's voluntary choice and goes against the signed promise to not miss-use the funds.

Agreed. This is a non-issue.

[KeithDoxen]

If they garnish 10%, that would be $5000.

If they garnish 10%, they are garnishing far less than state law allows. These are private, not federal loans. They can garnish up to 25% of wages with a judgment. That changes the calculus a bit I think.

[backtoschool]

If they garnish 10%, they are garnishing far less than state law allows. These are private, not federal loans. They can garnish up to 25% of wages with a judgment. That changes the calculus a bit I think.

The OP is living in nyc where the garnishment threshold is 10% for all types of judgments except child support and alimony (which is 25%).

[KeithDoxen]

The OP is living in nyc where the garnishment threshold is 10% for all types of judgments except child support and alimony (which is 25%).

My mistake. I was looking at a faulty resource.

[k10]

Is it where your legal residence is or where your employment is based? I am living and employer is based in NYC but I do have a CT drivers license.

On a seperate note, let's say 5 years down the line I get married and am still in NYC. Would assets and bank accts in wifes name be subject to collection efforts?

[backtoschool]

Is it where your legal residence is or where your employment is based? I am living and employer is based in NYC but I do have a CT drivers license.

On a seperate note, let's say 5 years down the line I get married and am still in NYC. Would assets and bank accts in wifes name be subject to collection efforts?

It's based on where your legal residence and employment is. So you would be subject to the 10% wage garnishment, not the 25%. I lived in nyc for over 10 years (just moved from there a year and a half ago) and at the time, I was thinking of letting my student loans go back into default because it would be cheaper than paying them on the income contingent plan. (I was making 185k a year plus bonuses at the time).