Student Loan discharge?

[jacko]

Very few have been able to discharge student loans in a BK. What criteria(s) were used to successfully discharge? Is their a form(s) you can submit with the BK forms to request discharge?

[discombob1]

There are a few stickies on this subject... trust me, your student loans aren't dischargeable.

[keepmine]

You will need to file for an adverserial proceeding and have a judge rule on the dischargabilty of the student loans. This is a sepaarte proceeding from the rest of your bk.

[tcreegan]

Hi jacko,

The criteria is called the "Brunner test" but don't get hopeful on the first read, courts interpretation of it are very stringent.

(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;
If you had the highest income job you are qualified for, maximize income and minimize expenses, paying interest only, with low income housing and food stamps, you end up in the homeless shelter if you pay your student loans. Not being able to get a job in your field doesn't help, they look at what jobs you are qualified for. What you need is a disability that completely prevents you from working.

(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;
The economy in the tank doesn't count, is your disability permanent?

(3) that the debtor has made good faith efforts to repay the loans.
Did you maximize income and minimize expenses and make some kind of payment? Did you apply for a hardship or income based payment?

I'm not posting this to scare you off, but you need to go into a student loan adversarial proceeding fully prepared or you will go down in flames. Personally I think student loans are a form of indentured servitude and I hope BK courts move off the hardline position to something more reasonable. The encouraging trend I've seen is more cases where the court didn't forgive the whole amount, but reduced the size of the student loan to make it more reasonable. Research cases from your judicial circuit to see what you are up against.

FYI, if you are permanently disabled w/ federal backed loans, it is probably easier to get your loans forgiven by the Dept of Ed than the BK court.

If you do get your loans discharged, tell us how you did it, I will dance in the streets for you!

Tom in Colo