Bankruptcy Law Questions? Ask a Bankruptcy Lawyer Now.
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Question: i am in default on college loans. the amount they are demanding is more than my yearlybsalary. 65000. my home has lost value and is worth less than i owe by 40000. How can I stop the legal action?
Response 1: Make arrangement to pay the amount due in installment. If the loans are subsidized and unsubsidized loans, you may consider consolidating through Ford Direct Loan Program, U.S. Department of Education. Click here for more information on Ford Direct Loan Program:
is bankruptcy an option?
Response 2: Not really. Generally, student loans are not dischargeable in bankruptcy. Unless you file adversary complaint with the Bankruptcy Court to determine the dischargeability of the debt due to extreme hardship and the Court rules in your favor, the student loans would not be discharged as part of a bankruptcy case. See 11 U.S.C. Section 523(a)(8). The adversary complaint is similar to a regular civil trial with the student loan lender most likely to respond to your complaint to determine the dischargeability of the debt and file discovery requests including but not limited to requests for production of documents, interrogatories, and deposition. Currently, it is very hard to discharge student loans under the current law. However, it is not impossible.