Student Loan Hardship Discharge question

[Brisco444]

We will be filing bankruptcy early next month. One reason we are having to file is that our student loans came due (my husband and I consolidated our loans--both of us have MAs) and we can't pay credit cards with a $500 month bill due. As it stands now, after 6 months of no credit card payments, we are barely making it. I do not work--we have two special needs daughters age 4 and 5--and cannot find skilled care for them that would be affordable.

Our car is on its last legs, but we own it free and clear. Even a $200 repair bill sends us scrambling. As it stands now we need about $1000 dollars of work on it but can't afford it. My husband also commutes to work. We will be needing to buy a new car soon.

Obviously, we are talking future hardship here. After the bankruptcy, what do we do with student loan debt if we need a car? My mother in law has offered us her 2002 Odyssey for 15,000, but we can't swing it yet. Obviously, a car will take precedence over our student loans.

Just looking to see if it would be a good idea to bring this up with our atty in 2 weeks, or wait and see if we have to potentially default on our loans due to transportation issues.

Thanks,
Denise

[FreshLikeADaisy]

I just got done reading a post (not sure which thread) today that said bk automatically throws student loans into a form of forebearance, so you may want to check that out. But yes, asking your atty sounds like a good idea. You could also ask the student loan folks.

I have a feeling that the hardship discharge is a whole 'nother issue that will not be resolved by bk, but maybe someone more knowledgeable about student loans can step in and answer that...

[kiddles]

It is possible (but very difficult) to have student loans discharged in a BK. You'll need a very good attorney, experienced at doing it. It is an adversarial action you must file, separate from teh normal BK filings, and will cost $$ in attorney fees. Talk to a couple of attorneys and see if they think it would be possible for you. If so, it might be worth it to beg or borrow the $$ for the attorney to do it.

[biotechsolution]

You can most likely put your student loans in a suspended
status, in fact they will be put in that status the minute
you file for BK. It will also likely take a few months after your
discharge until they start contacting you to start repayments.

To actually get a hardship discharge on your student loans would be almost impossible in your situation. Unfortunately the courts are only interested in whether you can work. If you were disabled and couldn't work you may have a chance at a 'hardship' discharge.

[whywhywhy]

Just going by what I’ve read here but,

It seems the courts look at a few things (all of them together, not just one) when considering an undue hardship claim. One being your current ability to maintain a minimal standard of living, they look at both your current ability and future. You also need to be able to prove that the situation that has put you in this position will more than likely continue indefinitely. They also look to see if you have already tried in good faith to repay the loan. If your loans just became due, this isn’t viewed favorably. They want to be able to see where you have tried and struggled. I think an undue hardship claim in your situation would unfortunately be nearly impossible, but, only your attorney can tell you for sure. I do feel your pain though, to put it rather bluntly, it sucks. When you file your student loans will be put in bankruptcy forbearance. They also have many repayment plans available, some that get rather creative, so my best advice is to contact and work with them. If you haven’t taken a forbearance in the past, most of them let your for at least 12 months. I had to do it for 6 months when I was unemployed a couple years ago. They had me fill out some really basic forms and I just put "Unemployed" in the reason line.

[erinmi]

Our student loans have been in forebearance for 3 years through the US Dept of Ed because we have not been able to pay on them. I don't know if it is different if your loans are privately held, like with Sallie Mae.

If you do have them through the Dept of Ed and you have online access, log-in to your account and then there is a link to do a general forebearance for up to a year. You do it online and they don't even really ask you why. Once your year is up, you can just go back in and do it again. Like I said, I've done it for 3 years now, but I expect I will be able to pay on them once our BK is discharged.

[Brisco444]

Our student loans are maxed out on the forbearance/deferment issue. The income sensitive payment is the $501 we are currently paying. We have been paying 6 months now, but, like I said, when our car dies there will be no way to pay the student loans and a car payment. Without the car, there will be no way for my husband to get to work. We only have/need the one car because I do not drive due to a medical reason.

I guess it will be merely a wait and see situation. Thanks for all the feedback. I was fairly sure that we wouldn't qualify.