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WALLSTREETESQ
WALLSTREETESQ, Attorney
Category: Bankruptcy Law
Satisfied Customers: 17222
Experience:  14 years exp., CH 7 AND 13 Bankruptcy cases, AFL-CIO UNION PLUS, UFT NYSID AND ALL MAJOR UNIONS
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I have 300k in student loans and 60k income. Would this be

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I have 300k in student loans and 60k income. Would this be considered undue hardship?

WALLSTREETESQ :

Hello I am a licensed attorney here to help you with your question, please review my response and do not hesitate to ask for clarificati on

WALLSTREETESQ :

if you have very low income or your loans are from a for-profit trade school, you may have a better chance. Courts use the Brunner test to see what is an undue hardship:



The Brunner Test


Under this standard, you can discharge your student loans if you meet all three of these factors:
Poverty. Based upon your current income and expenses, you cannot maintain a minimal standard of living for yourself and your dependents if you are forced to repay your loans.
Persisitence. Your current financial situation is likely to continue for a significant part of the repayment period.
Good faith. You have made a good faith effort to repay your student loans.

WALLSTREETESQ :

In your situation, if you have children and the loan debt would not allow you to pay for basic life needs it may be possible, however, in most situations, if you are able to make an income, the student loan debt would not be discharged.


 


 

WALLSTREETESQ :

If you were not able to work for example due to a disability, then the student loan payments would be an undue hardship.

WALLSTREETESQ :

if you have very low income or your loans are from a for-profit trade school, you may have a better chance.

WALLSTREETESQ :

What you may have to do, is consider defaulting on the student loans, and let them garnish your pay checks for payments, the garnishment payments may be smaller then your payment plan with them.

WALLSTREETESQ :

In Indiana, wage garnishment is allowed under Indiana Code Title 34, Article 25, Chapter 3: Garnishment, and IC 24-4.5-5-105, and federal law 15 U.S.C. 1673(a). If the judgment-creditor is aware of the debtor’s place of employment, it may seek wage garnishment. Under federal law, the garnishment applies to 25% of the debtor’s net take home pay, (i.e., gross pay less statutorily mandated deductions)

Customer:

How much does the circumstances of the situation weigh in? For instance, I took out student loans knowing that I was going to med school and would be making great money. However half way through school I had family and other financial issues that lead to me failing out. Now I have a Masters degree and only qualify for work as a tech in a lab.

WALLSTREETESQ :

That can be brought up, if you took the debt for school and did not complete the program, then you should request an undue hardship hearing, and be detailed about the circumstances which made you quit medical school, and advise the Court that you did not obtain any benefit from the medical school portion of the loans.


 


Court do also look at all circumstances, it may be possible to have the medical school portion discharged

Customer:

What are the odds though? Should I spend a couple grand and lose or just default?

WALLSTREETESQ :

You need to hire a local attorney it may be worth it if you have children or are married, and you would not be able to pay rent, food, etc., with the student loan payments, if you are single, and have no children that would hurt you.

Customer:

I am married and my wife has student loans as well. Could that be beneficial?


 

WALLSTREETESQ :

Yes, but her income will also be considered.

Customer:

Would I be able to do it alone or would we both have to file?


 

WALLSTREETESQ :

You can file, but her income will still be considered, all household income is considered.

Customer:

I also hear that if all you have is student debt you shouldn't try bankruptcy. Why is this?

WALLSTREETESQ :

Because student debt is not easy to be discharged, most other debts can be discharged in most cases.

Customer:

How often do people succeed when they don't have some type of disability?


 

WALLSTREETESQ :

It is rare less then 5%, also look into the new Income based repayment plan as well.


 


http://www.whitehouse.gov/blog/2012/06/07/income-based-repayment-everything-you-need-know

Customer:

So really I should save the money I would spend on an attorney and put it towards the loan?


 

WALLSTREETESQ :

that may be best at this moment.

Customer:

Thanks for your time

WALLSTREETESQ :

Good luck, and be aware in a few years, the bankruptcy law may change to allow for you to reduce your loans through the Courts.

WALLSTREETESQ and other Bankruptcy Law Specialists are ready to help you

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