Need help with determining if my private school loan was discharged or not?

[sven137]

My question is a lenthy one, but I want to include all the details.

I have two private "school" loans that were originally Chase Education One loans, I'll quote them for what kind of loan it really is.

"The Education One loan is an unsecured, credit-based loan that can be used for any education-related expense—including a computer and previous school fees. Unless you're employed while in school and meet other income and credit guidelines, you may need an eligible U.S. cosigner to qualify. A cosigner can be a parent, relative, spouse, friend or other eligible adult.
- or -
Education One is an unsecured consumer loan (also referred to as a private or alternative loan) for all of your education needs—from K-12 through graduate/professional school."

The loans have since been sold to AES, American Education Services, but still fall under original promissary note.

I went to my lawyer for initial consultation about Chapt. 7 and after coming to the realization that I needed to file, I asked him about these loans and whether he thought they could be discharged, he said he doubted it, but that he still wanted to look at the promissary note to make sure.

It took some time, but I got him the promissary note. And he must have found something in there that gave him some confidence that they were dischargable, because after reading through the promissary note he said he was 95% sure he could get these discharged. Well, I actually didn't get to talk to him about it, but his aid told me that they read through the promissary note together and there was nothing in there indicating the loans were non-dischargable, and that they were in fact private, unguarunteed, non-subsidized, credit-based loans, dischargable on a chapter 7.

Well, after his advice, we put them on our chapt. 7, had our 341, and have been waiting for our dischage papers from the court.

Last week I pulled our credit report to see what all had been discharged and under AESs two loans it said "Derogatory report - Bankruptcy Withdrawn". I didn't know what that meant, so I called my lawyer. I got his assistant and she said she didn't know either. I then called AES and straight-up asked them if the loans had been discharged, I was told by them that it was being reviewed and that I would receive a letter in the mail with the results.

We got our dischage papers from the court a few days later. We then called my lawyers assistant to ask if we can assume that the private "school" loans were discharged for sure and she told us that if they (AES) didn't dispute the discharge within the alotted time, that they were now discharged.

Which sounds great, but I have not had complete confidence in her the whole time we've been dealing with her. I want a second opinion, because I'm reading in several places that since 2005, if a loan has anything even remotely to do with school that it is non-dischargable on a chapt. 7.

So my ultimate question is: If AES thinks my loans are non-dischargable, or simply doesn't know yet, and they for whatever reason end up being non-dischargable, would they have had to bring that up before I got my discharge papers? Is it too late for them, or does, whether something is dischargable or not, fall into the 60 day limit, or is it exempt from that?

Am I free of these loans yet or not???????????

[lrprn]

Am I free of these loans yet or not???????????

I hate to be doom-and-gloom here, but from the descriptions you posted, these two loans do appear to meet the definition of student loans - see http://www.moranlaw.net/private_student_loans.htm

The fact that these are private loans doesn't matter anymore because after Oct 2005, private student loans are treated the same as government student loans - neither is easily dischargeble in bankruptcy because you must prove "undue hardship" in court. Most bk court cases cite Brunner v. New York State Higher Education Services Corp. (October 14, 1987, #41, Docket 87-5013) for a definition of "undue hardship":
- That the debtor cannot both repay the student loan and maintain a minimal standard of living.
- That this situation is likely to persist for a significant portion of the repayment period of the student loans.
- That the debtor has made good faith efforts to repay the loans.

You must meet all three conditions. There have been cases of individuals living solely on disability and unable to work who have not been able to get their student loans discharged - it's a very tough court battle.

There's an excellent explanation of how student loans are typically handled in bankruptcy at http://www.moranlaw.net/studentloans.htm

If your lawyer is able to get your student loans discharged, please come back and let all of us with student loans to pay back know how he did it!

[sven137]

There's an excellent explanation of how student loans are typically handled in bankruptcy at http://www.moranlaw.net/studentloans.htm

If your lawyer is able to get your student loans discharged, please come back and let all of us with student loans to pay back know how he did it!

I appreciate that, but you didn't answer the question. I've already read every word on Morans website concerning student loans. The question wasn't whether loans are dischargable, the question was did AES screw up by not disputing before the discharge deadline therefore I'm free, or is there no deadline for them because the loans are automatically considered non-dischargable.

[CindyLou]

I don't think they are required to "dispute" or object. My student loans, Sallie Mae, were listed on my creditor matrix, but that did not make them dischargeable. They did not object to anything.

[HHM]

With regard to student loans, The burden is on the Debtor to bring an action to determine whether the student loans are dischargeable. Simply listing the student loans on your schedule of creditors means nothing (you are required to list all your creditors when you file BK).