Income Based Repayment (IBR) / Student Loans / Chpt 7 / PRO SE

[blackdog]

This is my first post. Plz redirect me if it's in the wrong spot or covered elsewhere.

I'm filing Chpt 7 Bk in the 9th Circuit (possibly pro se). I plan to show undue hardship b/c of permanent & total disability. PLZ give me your opinions as I desperately need help! Anyone who meets the SSA's "permanent/total disability" standard is too ill to go pro se (me), but likely insolvent and unable to afford a lawyer (also me), so I'm literally begging for your help. THANKS ALL!

QUESTION:
1) Has the 9th circuit adopted the IBR or is it still using the older test? I don't have federal loans that qualify for IBR, but I understand that the court may use the IBR to determine if paying my private loans would be an undue hardship.
2) Does the court use IBR to determine undue hardship and dischargeability as I described above?

[SunkShip]

If you are SSA disabled and insolvent you should qualify for a public assistance attorney. Most states have a free legal program. I do not know how much they can do or not do, as trying to get rid of student loans is a full legal proceeding and they may determine that it is out of their scope. They will be able to help with the bankruptcy though, and that should relieve some of your burden.
Good luck! This board is full of people who will answer any question, this place has been my sanity for 3 months now.

[TurnThePage]

Ibr

QUESTION:
1) Has the 9th circuit adopted the IBR or is it still using the older test?

I've read cases on Westlaw for the 9th Circuit, and they generally seem to hover around the Brunner Test ... The IBR Plan isn't a necessity, but you must be able to demonstrate that you have @ least made a "good faith loan repayment," or have obtained deferments or forbearances. Otherwise the Student Loan Provider / Department of Education / Sallie Mae / etc., will argue that you have not exhausted your "administrative remedies."

2) Does the court use IBR to determine undue hardship and dischargeability as I described above?

To some extent, but more importantly, you will need to demonstrate that the IBR is not a solution because you do not have any disposable income, not now, and never will in the future.

I remember calling up "Free Legal Aid" & the attorney advised against initiating an Adversary Proceeding against the Department of Education. Their advice was to seek the discharge "Total & Permanent Disability" instead -- something which I did not qualify for. (It's ironic that the Department of Education has a different definition of "disability" than the Social Security Administration.) Free Legal Aid was completely unhelpful, @ least for me, so I decided to do it pro se.

The key to a successful Adversary Proceeding is to demonstrate "undue hardship" in 11 U.S.C. § 523(a)(8) ... I used an Affidavit with supporting documents (a "Proof of Income" letter from the Social Security Administration).

Disclaimer: Although I was a pro se plaintiff with a favorable outcome, I am not an attorney and cannot give legal advice.

[tcreegan]

Hi blackdog, and welcome,

Almost all BK courts use the "Brunner test" to determine if student loans can be discharged. But they interpret it pretty stringently...

Here is the three-part Brunner test:

(1) That the debtor cannot maintain, based on current income and expenses, a minimal standard of living for the debtor and dependents if forced to pay off student loans;
(2) that additional circumstances exist indicating that this state of affairs is likely to persist for a significant portion of the repayment period of the student loans; and
(3) that the debtor has made good faith efforts to repay the loans.

(1) This is the problem. If you have govt assistance, you have enough to live on and still pay on student loans. They are talking literally about if you pay on your student loans you will not have food and be forced into a homeless shelter. Here is where your question about IBR comes in....if you have IBR available, or deferrement, then your loans become less of a hardship and harder to discharge.

(2) Sounds like you have this one covered, permanent disability. The only question here would be if your disability prevents you from any kind of employment or is there some possible employment you can get. (possible is the right word, actually having job or applying for jobs and not getting selected is not an issue.)

(3) Good faith effort usually means 24 months of payments

Almost all student loans are rejected for discharge based on (1), followed by (2) and rarely by (3)

To get student loans discharged, you will have to file an AP, adversary proceeding, in the BK case. You can try this pro-se but the odds of winning are low enough w/ a good attorney and exceeding low for pro-se. You will need to do lots of research and analyze every case of a student loan AP in your district.

I don't want to be a 'downer' for you, but it is important to know what you are going to go up against w/ student loans and BK. If you can get your student loans discharged, or even a portion discharged, I will be the first to congratulate you. Heck, I will dance in the streets!

Tom in Colo

ps: for a pro-se BK there is a book referred to as NOLO (www.nolo.com) which apparently is a step-by-step guide to filing a BK

[wipetheslate]

To get student loans discharged, you will have to file an AP, adversary proceeding, in the BK case. You can try this pro-se but the odds of winning are low enough w/ a good attorney and exceeding low for pro-se. You will need to do lots of research and analyze every case of a student loan AP in your district.

I came across one website that analyzed successful APs for student loans and found that pro se filers were much more successful than ones with an attorney.

At any rate, blackdog, I'm also in the 9th and hoping to get my student loans discharged based on medical reasons. I'm not currently disabled, although I could pretty much automatically qualify based on my medical diagnosis (based on my discussion with someone from the SSA). Because of the story I found above--and the fact that I don't have the money to pay for an attorney to do an AP--I'll most likely file pro se. But I won't be filing Ch7 until November or December.

[blackdog]

Dear Tom (& anyone who’d like to chime in):

Thanks for the welcome and the reply.

You said that the issue under part (1) of Brunner test is that “....if you have IBR available, or deferrement, then your loans become less of a hardship and harder to discharge.” This makes sense.
QUESTION: But what if I have private loans, which typically don't offer borrowers such income sensitive programs? Does this make me more likely to prevail on part (1) of Brunner?


You said that I’ll need to file an AP.
QUESTION: Is the AP a live meeting with cross examination or just exchanging documents via mail or in person? Do I need my doctor there to testify? Who else?

You said “If you can get your student loans discharged, or even a portion discharged, I will be the first to congratulate you. Heck, I will dance in the streets!”
QUESTION: I got the DOE to discharge my federal loans already, so if the offer to dance still stands, I’d love to know you were dancing in my honor! 

Thanks

[blackdog]

Dear wipetheslate:

Was that site Chuck Stewart's site that analyzed the AP filings of pro se petitioners? Could you please provide that reference or link? It sounds interesting. Good luck to you. In case you haven't been told already: Begin the SSA disability application ASAP because most applicants are rejected the first time and require an appeal with the SSA court.

Be well.

[blackdog]

Dear SunkShip: Hello. You've raised an interesting point, but in my area, even skilled BK lawyers have stopped taking student loan cases. Where does one find a "public assistance" lawyer to handle a difficult student loan bankruptcy requiring an adversary proceeding? I didn't know such an practitioner existed, but I'd love to meet him/her. Good luck to you :-)

[TurnThePage]

QUESTION: Is the AP a live meeting with cross examination or just exchanging documents via mail or in person? Do I need my doctor there to testify? Who else?

An AP is a full blown lawsuit in the Bankruptcy Court, and should not be taken lightly. After the initial paperwork is filed (Complaint & Answer), you can expect to make several courtroom appearances before the Judge and your Adversary. There is a pre-trial conference, a trial, & possibly motion hearings. I highly recommend you get a copy of "Represent Yourself in Court" (Nolo) ... Yes definitely, you should have your doctor testify at trial -- this will strengthen your argument on the Brunner Test ... Good Luck!

[blackdog]

TurnThePage,
Ordered the NoLo book per your request. The AP sounds daunting. Ugh.
Thanks

[tcreegan]

I got the DOE to discharge my federal loans already

PLEASE, post how you did this!!!!!!!!!!!!!!!!!!!!

Tom in Colo

[blackdog]

Dear Tom,
It's been quite a while since I first for my DOE disability discharge, but here's what I recall. My discharge was based on medical disability. I am permanently and totally disabled under SSA standards. I applied for a DOE discharge, which was promptly rejected for lack of medical info. I sent in relevant medical records and my doctor wrote an accompanying letter. There was a three year waiting period after applying, and once that elapsed and my situation had not changed (I think they looked at both my medical & financial status), my discharge was formalized.

[backtoschool]

Disability is not enough to have your loans discharged. You will have to prove that there is a certainty that you would never be able to work again. This is a stronger standard than what defines disability in general. If you can pay even ten dollars a month on the IBR plan, then you have not met the standard for dismissing the loans.

[blackdog]

Income Based Repayment (IBR) / Student Loans / Chpt 7 / PRO SE

Dear backtoschool:

You've touched on an issue about which I'm still unclear.

Disability is not enough to have your loans discharged. You will have to prove that there is a certainty that you would never be able to work again. This is a stronger standard than what defines disability in general. If you can pay even ten dollars a month on the IBR plan, then you have not met the standard for dismissing the loans.

Does this IBR standard (of paying, for example, 10 dollars a month) apply even when my loans are not eligible for IBR? Would the courts deny my discharge if I theoretically could pay $10 p/mo although no such program exists for my loans? I have only private loans, and my understanding is that IBRs apply only to federal loans. My federal loans were discharged by the DOE, so I'm stuck with private loans whose lenders are neither required to work out a payment plan with me nor have they elected to do so.

Thanks,
blackdog

[backtoschool]

The fact that your private loans have not yet agreed to settle with you, will not be the determining factor in your motion to discharge your loans. The deciding factor will be whether you, in your entire lifetime, will ever be able to work again, and whether you could come up with some sort of minimum payment to the loans over the course of your lifetime. It is almost impossible to meet both standards unless you are in a coma on permanent life support, etc.....