Schedule J confusion

[HED]

I have two student loans. The first is a consolidation loan for myself that I began paying on in 1990. The second is a loan I took out in 2000 towards my daughter's education. Both are now in default and ownership was transferred to the Dept of Ed collections dept because I stopped making payments on them when I became disabled in 2004.

Do I include them on shedule J even though I stopped making payments on them? And if yes, what should I list as the payment amounts? (1) The actual monthly payment as per the original terms of the loans, (2) the pay-off amount, or (3) the 15% maximum that the government is allowed and likely to "set-off" from my monthly SS Disability benefits?

I am also going to attempt to get discharge status for both student loans by incorporating an Adversary Proceeding as part of my bankruptcy.

[justbroke]

Student loans are not a valid expense on Schedule J. They automatically go into a deferment (dormant) period when you file bankruptcy and stay that way until you receive your discharge.

Are you filing pro se? Do you understand that it's practically impossible to get your student loans discharged unless you're in your twilight years in age and have no reasonable expectation to ever pay for them or you are severely handicapped due to disease, accident, or illness? You could win just because the Department of Education's Assistant U.S. Attorney just drops the ball, but that's not usually the case.

You should be reading up on how to get student loans discharged. It is nearly impossible for any able-bodied person to do so. I don't know how they'll treat your daughter's loans since she may have earning ability.

The key will be, whether your condition prohibits you from substantially gainful employment and earnings in the future. If you are on SSDI, that's probably a good indicator that you have no substantially gainful activity (SGA) in your recent work history.

(Ah, you edited your post. So, are you on SSDI or SSI? If it's the former, I think that may be good proof that you cannot work. That alone should work in your favor in your adversary. This doesn't assure that you'd win the discharge, but would help. You'll need to, for the Adversary, receive letters from doctors indicating your condition. Just like for the SSDI/SSI part, you'll need affidavits from the doctors that your conditions prohibits or restricts your work activity. You may need to have one or more of those doctors testify at a hearing to provide their expert testimony, since the DOE's U.S. Attorney will probably call his/her own. I'm assuming you can't afford to get an attorney to do the adversary?)

[HED]

I disagree. Line 13 - Installment payments, (a)Auto, (b)Other & (c)Other on schedule J for Chapter 7 cases, but NOT for Chapters 11, 12 or 13 if payments are to be included as part of the repayment plan. Also, I have seen several ‘attorney-prepared’ petitions that listed them there.

Yes, I am filing Pro Se. I know I’ve got my work cut out for me but I really have nothing to lose (except maybe my hair and sanity). SSD has been, for the past five years, and will continue to be my only source of income due to an injury and other issues. I have been reading quite a bit on the subject. The second loan was for the benefit of my daughter’s education but she has no financial liability towards it.

Thanks for the post; I’ll consider all the input on the subject that comes my way; but the original questions still stand.

[justbroke]

I don't understand what you're asking now or why you put that you don't agree. Are you filing for a Chapter 13? I may have incorrectly assumed that you are contemplating filing for Chapter 7. I am well versed in getting a Chapter 13 Plan confirmed as a pro se debtor. I'm also familiar with procedure around adversary proceedings as well, having also done that myself and won.

So what question(s) still stand?

If you are going for a Chapter 13, then you'd list your payment going forward on Schedule J. If I was doing this from a strategic standpoint, and trying not to have too much DMI, I might put the amount of the regularly scheduled payment there (not some 15% cutoff). Then, you'll have to argue with the Trustee over what the right amount is. You have a atypical situation.

For some reason, even after you edited your post, I didn't realize you were asking about what amount to include on a Chapter 13 Schedule J.

[HED]

Sorry for the confusion. I should have specified I am filing Chapter 7. The question is what to enter for the amount as I haven't been paying on it for 5 years. Should I enter the amount I'm supposed to be paying or should I enter the likely amount of "set-off" since that is the only way it will get paid if I lose the AP?

[justbroke]

I might be inclined to put the regular "contractually due" amount. What are you going to put in your Chapter 13 Plan? Are you going to just let it stay in deferment during the pendency of your Chapter 13 discharge, or are you going to actually pay on the loan during your Chapter 13? That's the $64,000 question. Your Schedule J should reflect your Plan as much as you can.

[HED]

Well, as I previously mentioned, I'm filing chapter 7, not 13, so your questions do not apply.

[justbroke]

I'm just reading too many threads these days. If you're filing for Chapter 7, I will go back to my original statement, and that is that you can't include your student loan payments on Schedule 7 unless you have an exception.

[rjmwx81]

and that is that you can't include your student loan payments on Schedule 7 unless you have an exception.

Schedule J you mean.

[Lockeout]

HED, I had the same question about student loans in Chapter 7, and the answer I got was that some districts will allow it on schedule J and others won't (since the bk deferment doesn't last forever, I don't understand why they wouldn't). My attorney seemed to think it was okay to list it, but then again we haven't filed yet.

[justbroke]

Schedule J you mean.

Yes, that is what I meant, but I'm just so confused now.

[HED]

OK guys, lets put a different spin on it.

Forget the student loans. I have two other loans that I'm not sure of if and/or how to include them on schedule J. The first is my car loan. I voluntarily surrendered it five years ago because I couldn't continue making payments on it. That loan was initially secured by the vehicle but since it was surrendered, it is now an unsecured loan. The bank has since re-sold the car to pay-down part of the balance owed but a balance remains due from me. The second loan (from the same bank) is an unsecured signature loan.

Now, do I list the two loans on my chapter 7 schedule J as an installment payment expense even though I have stopped making payments on both of the loans five years ago and will not be making payment on them in the future either?

[rjmwx81]

Now, do I list the two loans on my chapter 7 schedule J as an installment payment expense even though I have stopped making payments on both of the loans five years ago and will not be making payment on them in the future either?

No. You can only list what you'll be making payments on going forward.

[HED]

OK rjmwx81, now we're getting somewhere. So since both of those loans will be discharged, they are not to be included as a future expense. So lets take this a step further.

I also have the two student loans as metioned at the start of this thread. I haven't been making payments on those for five years either. But, unless I win my Adversary Proceeding, I will be required to continue making payments on both of them. Do I list them or not? Also, if I lose the AP and remain liable for the student loans, I still will not be able to make the payments on them. What will happen is the feds will reduce my SS benefits by 15%. So, if I do list these two loans on schedule J, what should I put for the amounts; the original monthly payment amount or the 15% amount?

[justbroke]

OK rjmwx81, now we're getting somewhere. So since both of those loans will be discharged, they are not to be included as a future expense. So lets take this a step further.

You don't know that they'll be discharged! Right now, they are contractually due, so you can include them, since, short of actually getting them discharged, you are required to pay them.

I also have the two student loans as metioned at the start of this thread. I haven't been making payments on those for five years either. But, unless I win my Adversary Proceeding, I will be required to continue making payments on both of them. Do I list them or not?

While no one can stop you from actually putting them on your Chapter 7's Schedule J, the overwhelming number of USTs (United States Trustee) will object to them being included as an allowable expense.

Also, if I lose the AP and remain liable for the student loans, I still will not be able to make the payments on them. What will happen is the feds will reduce my SS benefits by 15%. So, if I do list these two loans on schedule J, what should I put for the amounts; the original monthly payment amount or the 15% amount?

Again, if you are allowed to put them on Schedule J, which 99% of the Districts you are not allowed to include them on a Chapter 7 Schedule J, then you'd put the contractually scheduled amount.

Don't short change yourself. There's a strategy to bankruptcy and that's why not all attorneys even practice bankruptcy law. You don't want to put yourself into the position that you are in the weird state where you can't afford to file Chapter 13, but also can't get a discharge in a Chapter 7. There are people in that category. A bankruptcy discharge is not a "right".