Private student loan bankruptcy

[julienurse2007]

Hi everyone. I hate to have to ask this, but I'm in a bind. I'm a single (recently divorced) mother of two boys. I graduated nursing school in May of this year and have been working as an RN for the last 6 months. My student loans are coming due in December. I have federal loans and I also have a very large, personal student loan that I took out from nextstudent.com. I took this large loan out to get my through school, and to help pay my bills because I was not working at the time. I know that I have to pay back my federal loans, but does anyone know if I can file bankruptcy against the nextstudent.com loan? I lived off this loan and my credit cards for a year and a half. I got myself into so much debt that there is absolutely no way I can afford to pay it all. I feel horrible about this, because that large loan helped me get through school without having to worry about my finances, but now....I'm worried! Any information you can give me would be greatly appreciated!

[CATCHMEIFYOUCAN]

Any student loans would have to be paid back, unless someone here knows anything different?

Best to you, Catchmeifyoucan

[tinroofrusted]

I would see if you could refinance it somewhere and get lower payments.
You have to repay back student loans now. They are no longer dischargable in BK....

[lrprn]

Welcome to BK Forum, julienurse - glad you found us! And welcome too from a fellow nurse...there are several of us hanging around here as well.

I know that I have to pay back my federal loans, but does anyone know if I can file bankruptcy against the nextstudent.com loan?

Unfortunately when the current bankruptcy law was passed in 2005, the new law made private student loans as hard to wipe out as federal student loans.

From your story, you don't come close to meeting the strict criteria to discharge either your federal or your private student loans by filing bankruptcy.

Since you are posting here, I'm guessing that the payment on your student loans is going to be a huge hit on your budget...maybe too big . Take a look at the options offered here for what to do when you can't pay your student loans - http://www.nolo.com/article.cfm/pg/1...3/208/135/ART/ . Worst thing you can do when you are struggling to pay student loans is do nothing. Good luck - hope everything works out for you.

[jnjw]

Hi,

I am new here, but I wanted to post on this because my husband and I are filing Ch. 13 (and then maybe later converting to a 7) in the next couple of days and we just met with our atty on Wednesday to sign the paperwork and I can tell you what he told us.

A little background - we were already headed for bankruptcy because of some medical issues/being out of work, BUT the breaking point was ALL of our student loans coming due at the same time. I have 3 federally backed, my husband has 2 federally backed, but he also has a HUGE private student loan. The montly payment on the private loan alone is $889 per month and the interest rate is 14.75%, I believe. He had tried to consolidate it - no dice. He was permitted to use 1 of his 2 forbearances, but he had to pay $150 to put it in forbearance for 6 months. He only has 1 more forbearance over the term of the loan, which is 20 years. We couldn't lower the payment, nothing. Our situation is worse than disastrous. So we were thinking bankruptcy won't help, but we can't even remotely pay it either, so we wanted to get them off our backs for a while to try and come up with a way to pay it.

Anyway, long story short - when we spoke to our atty Wednesday, I started crying because it just seems like nothing is going to help us - nothing, not bankruptcy, we are both at maximum earning capacity, neither of us can get an additional job because of the hours we work already, and we have nothing to sell that would even come close to touching the balance of any of these loans. My atty said to bring him the promissory note, that the new law doesn't say that any and all private student loans cannot be discharged, but he needs to see the promissory note to find out if this is indeed a true "private loan." BTW, there is NO mention in the promissory note of it being guaranteed, nor is there information about not being able to file BK, which if you read your promissory notes for federally backed loans, most likely you will find that information in BIG BOLD PRINT.

Anyway, my husband is dropping the note off to him today so he can look at it. The atty said that if he finds it is a truly private student loan, he is going to list it as unsecured debt on our forms. Yes, the lender will definitely contest it and we will be forced to have a hearing where our atty can argue. He said he's not 100% certain about getting it discharged, but he is going to try it and see what happens. Maybe we're guinea pigs, I don't know, but I think it's worth a shot because I don't know what else to do.

I suggest speaking to an atty in your area. You never know what will happen. I know people say that hardship cases are hard to prove in order to get student loans discharged, but I just found a case on Pacer from my state in which a person who is working and not disabled got all of her federally guaranteed student loans discharged due to hardship after this new law took effect.

[BassBoy]

Just an FYI......Private loans, like student loans that are a signature loan, can be discharged in a Ch.7 BK as long as there is NO co-signer.

[jnjw]

Just an FYI......Private loans, like student loans that are a signature loan, can be discharged in a Ch.7 BK as long as there is NO co-signer.

Really? Are you serious??? If you are, you sincerely and truly just brightened my entire outlook on life.

Is there some law that I can read about this or a specific case or something?

[jnjw]

BassBoy,
I just noticed you're with Shaklee. I am too! What a coincidence! I'm not longer building the business, but still a happy customer/member.

[BassBoy]

Really? Are you serious??? If you are, you sincerely and truly just brightened my entire outlook on life.

Is there some law that I can read about this or a specific case or something?

What I can offer for now is that 2 dear friends of mine both received students loans for school (they were Sallie May signature loans). Ironically, they both filed CH.7 and one friend was able to discharge his signature loan because the loan was in his name only, but the other friend was not able to discharge his signature loan because he had a co-signer. Having a co-signer doesn't mean that your no longer liable to pay loan, however the co-signer will be responsible. This friend has to continue to pay his signature loan, even though he is discharged.

As far as a law, a signature loan is an unsecured loan, therefore discharged in BK.

[jnjw]

Sallie Mae is exactly who provided my husband's loan that that is in question. There is no cosignor.

What you have offered has just given me a glimmer of hope!

Thank you!!

I will be sure to come back here and let everyone know the outcome of our case. I imagine we won't know anything until January or February, though.

[BassBoy]

You'll have to look over the loan docs and see if it is a signature loan. If you will be hiring an attorney, or at least consulting with a few, you'll defiantely want to ask about this.

I hope this works out for you.

[whywhywhy]

The ability for private student loans to be discharged without proof of undue hardship, all depends on if it is a "Qualified Education Loan" and there are quite a few factors that come in to play when making this determination. Best bet is to contact a lawyer and bring your loan documents. Just a side note, one of the quickest ways to tell if it is a "Qualified Education Loan" is if it was funded by a nonprofit group, such as TERI.

Here is a link for all the information one could ever want (and more!) on Private Student Loans and there ability to be discharged in bankruptcy.

http://www.finaid.org/questions/bankruptcylimitations.pdf