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cfortunato
cfortunato, Attorney
Category: Bankruptcy Law
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Experience:  Bankruptcy professor.
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If a debtors wages are being garnished due to not paying on

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If a debtors wages are being garnished due to not paying on student loans. Can chapter 7 BK offer any relief? Chapter 13? If not is there any way to remedy this. Deferring the loans is not an option as this has already been done.
Submitted: 5 years ago.
Category: Bankruptcy Law
Expert:  cfortunato replied 5 years ago.
Hi JACustomer,
Is the student loan(s) a federal government loan, or a private student loan?
Customer: replied 5 years ago.
These are Federal loans however I'm curious as to how private student loans would be handled.
Expert:  cfortunato replied 5 years ago.

Neither a Chapter 7 nor a Chapter 13 Bankruptcy has any affect on student loans, which are generally non-dischargable unless the debtor is permanently disabled.

However, there are a few limited non-Bankruptcy remedies for federal student loans, which you can see here:

http://www2.ed.gov/offices/OSFAP/DCS/loan.cancellation.discharge.html.

These limited remedies are not available for private student loans.

 

 

 

 

 

Customer: replied 5 years ago.

Thank you, XXXXX XXXXX at the link you sent. I mentions "undue hardship" as defined by case law in your jurisdiction. (See below) How would I prove "undue hardship"?

 

Bankruptcy

Effective October 8, 1998, your obligation to repay Title IV, HEA student loan and grant liabilities can no longer be canceled (discharged) due to bankruptcy, unless you can successfully prove that repayment of the debt would cause "undue hardship" as defined by case law in your jurisdiction. Previously, student loan and grant liabilities could only be canceled (discharged) due to bankruptcy under certain conditions which, in general, depended on the amount of time between the date on which a loan or grant liability was due or the date that the bankruptcy was filed, as well as undue hardship.

Expert:  cfortunato replied 5 years ago.

New York uses the "Brunner test" which requires a showing that 1) the debtor cannot maintain, based on current income and expenses, a “minimal” standard of living for the debtor and the debtor’s dependents if forced to repay the student loans; 2) 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) the debtor has made good faith efforts to repay the loans. (Brunner v. New York State Higher Educ. Servs. Corp., 831 F. 2d 395.

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Customer: replied 5 years ago.
In regards XXXXX XXXXX "Brunner test" would this be used in conjunction with a chapter 7 BK or is it a stand alone method of canceling student loans with the Department of Education?. If this strategy is used in conjunction with the filing of a chapter 7 BK would the automatic stay stop the wage garnishment already levied?
Expert:  cfortunato replied 5 years ago.

1) The Brunner test is only applicable to a Bankruptcy - either a Chapter 7 or a Chapter 13.

2) Yes - the automatic stay would apply to a garnishment for student loans.

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