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Roger
Roger, Attorney
Category: Bankruptcy Law
Satisfied Customers: 26089
Experience:  BV Rated by Martindale-Hubbell; SuperLawyer rating by West
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question about my student loan issues. Hello, my mother

Customer Question

question about my student loan issues.

Hello,
my mother and i are in a SERIOUS bind at the moment and I sincerely XXXXX XXXXX with trying to figure out what to do.

I am currently in the process of filing Chapter 7 bankruptcy. A few years ago my mother did indeed co-sign on various Private student loans with me. The BULK of my student loan debt is indeed my own and unfortunately I am faced with EXCESSIVE Student loan debt. Among Other personal debts such as Credit card debt and etc. I am not proud, by no means of my personal fiscal irresponsibility and have gotten my mother caught up in it with my Private student loans.

When I was in college i was pretty much SURE beyond a shadow of a doubt that if the job market stayed at such a good place that upon graduation I would find gainful employment and pay back my loans. That didn't happen. So much has taken place in my life over the past few years that my personal debts have gotten the best of me and I see no way out. I have over 170,000 in student loan debt alone and DON"T make enough what so ever to even remotely maintain any of my loan payments especially the private. my loan payments alone would cost me over 1200 dollars a month to pay. that's with private and federal combined. I ended up working odd and end jobs and never obtained a REAL permanent job. I have a daughter who is autistic, and had to be home schooled as a result, and I am a single parent with no help outside of my mother who had been helping me with my daughter. I myself was recently diagnosed with ADHD, Asperger's Syndrome, and PTSD. It has been clearly stated those are the main reason's for my lack of being able to find gainful employment. I'm 33 years old and NEVER thought my life and the things that have happened would be this way. I strived so hard to make sure that i did everything i was supposed to even though i made numerous mistakes. Now my private loans are in default 2 of which are in collections. I was told that i could possibly have them discharged with my having excessive debt and a permanent disability that hinders my ability to make over a certain amount. I just wanted to know what are our options. My mom is actually caring for myself and my 2 children. Her job isn't permanent either and the contract she has is no longer renewable with her job after dec. and she may be out of a job herself. IF i can indeed get these loans discharged.. will she have to pay on the ones she cosigned or will she be released as well.

Stressed out and at my wits end.
Submitted: 1 year ago.
Category: Bankruptcy Law
Expert:  Roger replied 1 year ago.

Hi - my name is XXXXX XXXXX X'X a Bankruptcy litigation attorney. Thanks for your question.

 

Chapter 7 bankruptcy will allow you to discharge your unsecured debts (Iike credit cards), which should free up a lot of your monthly cash flow.

 

Also, student loans are difficult, but not impossible, to discharge in bankruptcy.

To do so, you must show that payment of the debt "will impose an undue hardship on you and your dependents."

 

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.

 

It is generally hard to get a complete discharge, but you may be able to reduce the debt somewhat and only repay a portion of the student loan debt.

The only problem with the student loans is if your mother signed along with you.

 

Even if you get a discharge of the debt, your mother would still be responsible for the entire balance of the loans, so you would have to deal with her issues as well. Your mother would likely have to also file bankruptcy and seek a similar discharge of the debt based on a hardship claim as well.

 

Bankruptcy will be helpful to get rid of your unsecured debts (like credit cards and other debts that don't have collateral attached) and secured debts (debts secured by collateral - like a mortgage loan, car loan, etc.) that you choose not to keep (reaffirm).

 

Freeing yoursel of these debts should allow you to be able to better manage your finances with your income.

Customer: replied 1 year ago.

WOW! this makes me so sad. Like honestly even if i did get the unsecured debts taken care of in filing chapter 7. I only make about $26,000.00 a year and that's on the contract position I have been able to obtain over the past 5 months. i just know that if she does indeed end up having to pay back these loans on my behalf.. she will LOSE her job. This hurts me to my core. I dont' know what to do. Even if you've been diagnosed with a permanent disability that affects your ability to get employment and she's having to care for you and your kids she would Still have to pay? I feel like such a goof. she's tried making good faith payments to one of my private loans it wasn't for the full amount, she paid what she could afford. and is paying full monthly payments on another. the former student loan (sallie mae tuition answer loan) she would send the partial payments too. They instead took the partial payments and applied them to the federal loans and NOT the private in which the checks she wrote clearly stated the Private loan account number. is that Legal?

Expert:  Roger replied 1 year ago.

I totally understand how you feel, and it's not an easy position to be in. I'm really sorry about your predicament, but it will get better with time.

You can get rid of many unsecured debts, but student loans are difficult to discharge. Also, it is still possible to get a discharge of those loans, but it is much, much more difficult to accomplish.

Also, if your mother were to file chapter 7, she could possibly claim relief from the loans just as you.

As for applying the payments, USUALLY the oldest/most delinquent debt is paid first. What the lender did is likely legal because most agreements/promissory note agreements state that the lender has the right to apply any payment to the oldest outstanding debt - - even if she designated the money to go somewhere else. This is very typical with lending institutions of any kind - - a bank, student loan company, etc.

Customer: replied 1 year ago.

I really do appreciate all your help and information on this.


 


I just hate that things had gotten so bad for us economically. we both were laid off at the same time and although she found work after a year of being unemployed.. I was out of work for almost 2 years. :( Thanks again for all your help

Expert:  Roger replied 1 year ago.

No problem. Glad to help.

This economy is very tough and many of us are victims of it. Unfortunately, the government doesn't want to help us out like it did all of the financial institutions. Bankruptcy has its place, and it would likely be beneficial for you in the long run. I know it's a difficult decision to make, but it is likely the best option you have.

Good luck and let me know if you have any additional questions.

Roger, Attorney
Category: Bankruptcy Law
Satisfied Customers: 26089
Experience: BV Rated by Martindale-Hubbell; SuperLawyer rating by West
Roger and 3 other Bankruptcy Law Specialists are ready to help you
Customer: replied 1 year ago.

Hi,


I visited my bankruptcy attorney Saturday and things went pretty well. The only issue I am having right now is the fact i have NO clue whatsoever on how to write loan forgiveness letters to my lenders. What am I to do?

Expert:  Roger replied 1 year ago.
Take a look at the following link: http://www.facebook.com/friends/requests/?fcode=AY-zYC3h5nakywkS&f=1500702711&r=100003491474599

The last heading discusses contacting your lender for debt cancsllation or forgiveness; there is also a link to forms, etc.
Customer: replied 1 year ago.

YOU ARE BEYOND AWESOME!!!!!!!!!!!!... thank you so much!

Expert:  Roger replied 1 year ago.
Glad to help. Let me know if you need anything further

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