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WALLSTREETESQ
WALLSTREETESQ, Attorney
Category: Bankruptcy Law
Satisfied Customers: 16420
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 included a sizable student loan debt in my CH 13. At what

Customer Question

I included a sizable student loan debt in my CH 13. At what point will I learn how the court is going to treat the claim ?
Submitted: 1 year ago.
Category: Bankruptcy Law
Expert:  WALLSTREETESQ replied 1 year ago.

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 clarification

WALLSTREETESQ :

Student loan debt is not dischargeable as per the bankruptcy law, without a debtor asking for a hardship hearing,

WALLSTREETESQ :

The Court will not discharge the debt, without such hearing, so their is no reason to wait for Court action.

WALLSTREETESQ :

Since you are protected by the automatic stay, you do not have to make regular student loan payments during Chapter 13 bankruptcy. Your student loans will be paid through your Chapter 13 payments according to the terms of your plan. If you have little or no disposable income, you may not have to pay anything towards your student loans in your repayment plan

WALLSTREETESQ :

You can still pay back a portion of your student loans through your Chapter 13 plan. The benefit of Chapter 13 bankruptcy is that you only pay back what you can afford. If you cannot afford your regular student loan payments, you can lower your monthly obligations by paying a smaller amount through your Chapter 13 plan. Since Chapter 13 bankruptcies can last as long as five years, this can allow you time to increase your income and more easily afford your payments after bankruptcy.

WALLSTREETESQ :

If you have any further questions please do not hesitate to ask.

WALLSTREETESQ :

If satisfied please provide us with positive feedback.

Customer: replied 1 year ago.
How does one request a harship discharge ?
Expert:  WALLSTREETESQ replied 1 year ago.

This can be done through a motion requesting an unde hardship, be aware this is a heavy burden for you,

Courts use different tests to evaluate whether a particular borrower has shown an undue hardship. A common test is 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 (2d Cir. 1987). Not all courts use this test. Some courts will be more flexible, some less.

WALLSTREETESQ, Attorney
Category: Bankruptcy Law
Satisfied Customers: 16420
Experience: 14 years exp., CH 7 AND 13 Bankruptcy cases, AFL-CIO UNION PLUS, UFT NYSID AND ALL MAJOR UNIONS
WALLSTREETESQ and other Bankruptcy Law Specialists are ready to help you
Expert:  WALLSTREETESQ replied 1 year ago.

http://www.studentloanborrowerassistance.org/bankruptcy/You must file a petition (called an adversary proceeding) to get a determination. This samplegives you an idea of what your complaint should look like.

If you already filed for bankruptcy, but did not request a determination of undue hardship, you may reopen your bankruptcy case at any time in order to file this proceeding. You should be able to do this without payment of an additional filing fee. Chapter 10 of NCLC's Student Loan Law manual includes extensive information about discharging student loans in bankruptcy.

UNDUE HARDSHIP EXAMPLESIt is up to the court to decide whether you meet the "undue hardship" standard. Here are a few examples of successful and unsuccessful cases.
  1. A 50 year old student loan borrower earning about $8.50/hour as a telemarketer was granted a discharge. The court agreed that the borrower had reached maximum earning capacity, did not earn enough to pay the loans and support minimal family expenses and appeared trapped in a "cycle of poverty."
  2. A college-educated married couple proved undue hardship and were able to discharge their loans. They both worked, but had income barely above poverty level. The court noted that the borrowers worked in worthwhile, although low-paying careers. One worked as a teacher's aide and the other as a teacher working with emotionally disturbed children. Even with a very frugal budget, they had $400 more a month in expenses than income. Their expenses included $100 monthly tuition to send their daughter to private school. Relatives paid for most of this and the couple testified that they objected to the public school's corporeal punishment policy. In agreeing to discharge the loans, the court also found that the couple had acted in good faith because they asked about the possibility of a more affordable repayment plan. Not all courts are as sympathetic to borrowers who work in low-paying careers. For example, one borrower was denied a discharge because he worked as a cellist for an orchestra and taught music part-time. The court suggested that this borrower could find higher-paying work. Another court came up with the same result for a pastor. The court found that it was the borrower's choice to work as a pastor for a start-up church rather than try to find a higher paying job.
  3. A number of courts have granted discharges in cases where the borrower did not benefit from the education or went to a fraudulent school.
  4. There have been mixed results when borrowers have tried to show that their financial difficulties will persist into the future. For example, one court found that a borrower's alcoholism was not an insurmountable problem, but some borrowers have won these cases. In one case, a borrower's testimony about her mental impairment, including evidence that she received Social Security benefits, was enough to convince the court of undue hardship. The court agreed with the borrower that her ongoing mental illness was likely to continue to interfere with her ability to work.

Even if you cannot prove undue hardship, you still might want to consider repaying your student loans through a Chapter 13 bankruptcy plan.

CHAPTER 13 and STUDENT LOANSA case under chapter 13 is often called "reorganization." In a chapter 13 case, you submit a plan to repay your creditors over time, usually from future income. These plans allow you to get caught up on mortgages or car loans and other secured debts. If you cannot discharge your student loans based on undue hardship in either a chapter 7 or chapter 13 bankruptcy, there are still certain advantages to filing a chapter 13 bankruptcy. One advantage is that your chapter 13 plan, not your loan holder will determine the size of your student loan payments. You will make these court-determined payments while you are in the Chapter 13 plan, usually for three to five years. You will still owe the remainder of your student loans when you come out of bankruptcy, but you can try at this point to discharge the remainder based on undue hardship. While you are repaying through the bankruptcy court, there will be no collection actions taken against you. You may have other options, depending on how judges decide these cases in your judicial district. For example, some judges allow student loan borrowers to give priority to their student loans during the Chapter 13 plan. You should discuss these options with a bankruptcy attorney.
Customer: replied 1 year ago.
If I want to file for a hardship discharge: 1) will it or can it be applicable only to my student loans or a portion thereof; 2) should it be filed now (pre-conf) or after ?
Expert:  WALLSTREETESQ replied 1 year ago.

It needs to be applied to the entire debt, and it should be requested as soon as possible,

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WALLSTREETESQ
WALLSTREETESQ
Attorney
2749 Satisfied Customers
14 years exp., CH 7 AND 13 Bankruptcy cases, AFL-CIO UNION PLUS, UFT NYSID AND ALL MAJOR UNIONS