Pre-bapcpa loan dischargeable?

[MothAudio]

Co-signed [not co-borrower] for a 10k student loan for GF in June 2005. Just before the BAPCPA ruling took effect I filed Chapter 7 and included the co-signed loan. At that time there was some question if it was a private or government backed loan. As it turns out it was private. Spoke with MarbleHead Recovery and they recognize it to be private but claim because it was a private-guarantor backed loan it wouldn't be dischargeable. Perhaps they are thinking about the current post BAPCPA ruling.

Because I filed prior to the ruling was this loan dischargeable or not? I faxed a copy of my Chapter 7 to American Educational Services and spoke with someone in the Graduate Division that handles these loans and he said it "looks in order" and should be receiving confirmation in the mail shortly but I'm curious. TIA

[HHM]

Pre BAPCPA, private loans that were funded by a government unit or non-profit institution were still non-dischargeable. It sounds like the servicer is claiming that even under pre-BAPCPA, the loans were non-discharegable. To my knowledge, there is no distinction between co-signer and co-borrower, a co-signer legally obligates themselves to payback the loan.

Ultimately, to solve the issue, you may need to file an adversary proceeding to determine dischargeability of the loan if they don't back down.

[KeithDoxen]

As it turns out it was private. Spoke with MarbleHead Recovery and they recognize it to be private but claim because it was a private-guarantor backed loan it wouldn't be dischargeable. Perhaps they are thinking about the current post BAPCPA ruling.

Unfortunately the collection agency is correct. The 1998 legislation that removed federal loans from bankruptcy also removed loans that have non-profit guarantors from bankruptcy, and that includes private loans that use non-profits as guarantors. One of the dirty little secrets of student loan politics is that the 2005 legislation impacted very few private loans, as many private loans were already using non-profit guarantors for this very reason.

Look into your loan of course just to be sure that it really did have a non-profit guarantor. This is the time to find your original loan documents and to read them.