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JoeLawyer
JoeLawyer, Attorney
Category: Bankruptcy Law
Satisfied Customers: 767
Experience:  Attorney in the practice of Bankruptcy Law since 1996
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i have a private student loan from chase that has now defaulted

Customer Question

i have a private student loan from chase that has now defaulted because i cannot make enough money to pay the loan. coincidentally, i've had to work more to be able to support myself and my family which made going to school impossible for me as well. my loan is for $40,000 with payments of about $350 for the next 20 yrs, and i make 12/hr. I have a disable sister who works for less than minimum wage, and a 64 yr old mother that works bout 4 hrs a week. Can i file bankruptcy and eliminate this debt?
Submitted: 7 years ago.
Category: Bankruptcy Law
Expert:  JoeLawyer replied 7 years ago.
Maybe. Student loans are non-dischargeable in bankruptcy pursuant to 11 U.S.C. 523(a)(8), HERE.

There are two ways to get the loan discharged in bankruptcy: (1) if you can show it is not one of the loan types which are protected by 523(a)(8), or (2) if you can show that, even if the loan is protected by 523(a)(8), that protecting it from discharge would impose an undue hardship on the you and your dependents.

Neither of these routes are easy.

Regarding (1), the text of 523(a)(8)(A)(ii) is pretty broad, so the student loan lender would argue that it's loan is protected by that section.

Regarding (2), the undue hardship standard is very tough. I read a case where a guy was in an accident and paralyzed from the waist down, and the court determined that he could still work a desk job so his student loans were not discharged. Often, if you can still work, you cannot discharge student loans.

So, you may be able to prevail under one of these approaches, but it really takes a crystal ball to know if all the money you spend to try is worth it or a waste.

One thing you can do to make as informed of a decision as possible is see a local bankruptcy attorney. Many of them offer free consultations, and they will know the disposition of your local judges and expected costs of the action to help you decide if it is worth the risk.

Another thing you can try is see if Chase offers any type of loan forgiveness programs. You can read more about them HERE.

Good luck.

Joe

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