Student Loan Payments after Ch 7 Dismissal

[dontburnthep]

We filed Ch 7 in Dec/10, and will be dismissed (long story, Ransom decision ruined our 7 and we did not do any pre planning for a 13) next week. The student loans have been in administrative foreberance through the long process. I've read terrifying stories of lenders selling their loans while going through the BK process. They have not contacted us and we were current when we filed. Will they just start sending us payment letters when the dismissal goes through? Or is it really a possibility that they have sold the loan while we waited for the dismissal to be complete?

[KeithDoxen]

It depends on what kinds of student loans you have. Were they federal loans or private? This gets confusing because people think, "Well Sallie Mae isn't the government, so it must be private!" But of course most private student loan companies also deal with federal loans, so it really depends on whether the government is funding the loan in any way. The reason this is important is that federal loans are almost always okay. The worst that can happen with them is they end up back in the hands of the Department of Education, which will be able to put you on income-based payment plans and that sort of thing. If you have totally private loans --- with a private lender, private guarantor, etc --- those are the ones that can and often are subject to an automatic default during bankruptcy. If you tell us what sorts of loans you had we might be able to give you better advice.

[olivies]

Well, when we filed our 13 we were behind. The loans had been turned over from Sallie Mae to the guarantor because we were behind. Then we let our 13 dismiss, as you know, and the weird thing is that Sallie Mae then started sending me regular notices and billing statements again. I never expected that. I'm curious to see what happens now that our 7 has been discharged.

[dontburnthep]

It depends on what kinds of student loans you have. Were they federal loans or private? This gets confusing because people think, "Well Sallie Mae isn't the government, so it must be private!" But of course most private student loan companies also deal with federal loans, so it really depends on whether the government is funding the loan in any way. The reason this is important is that federal loans are almost always okay. The worst that can happen with them is they end up back in the hands of the Department of Education, which will be able to put you on income-based payment plans and that sort of thing. If you have totally private loans --- with a private lender, private guarantor, etc --- those are the ones that can and often are subject to an automatic default during bankruptcy. If you tell us what sorts of loans you had we might be able to give you better advice.

They are federally backed loans. Thanks!

[KeithDoxen]

They are federally backed loans. Thanks!

You shouldn't have too many problems with federal loans. Like I said, even if it ends up back at the Department of Education, there are all kinds of loan rehab and income based repayment programs. Even if you have to jump through some hoops, you won't find your loan due in full at the end of the day. Be glad you have federal loans and not private.

[dontburnthep]

You shouldn't have too many problems with federal loans. Like I said, even if it ends up back at the Department of Education, there are all kinds of loan rehab and income based repayment programs. Even if you have to jump through some hoops, you won't find your loan due in full at the end of the day. Be glad you have federal loans and not private.

Thank you so much for your help