Student Loans | Matt Berkus

Archive for the ‘Student Loans’ Category

Can You Pay Student Loans in Chapter 13 Bankruptcy?

Sunday, December 18th, 2011

But for a showing of undue hardship, student loans are non-dischargeable in bankruptcy; outside of bankruptcy, there are few options for a struggling debtor to find relief from crushing student loan debt. Moreover, student loan debt has no special status in bankruptcy; you cannot “just choose” to pay your student loans ahead of other unsecured debt (e.g. credit cards).

So, what is a struggling debtor to do? Chapter 13 bankruptcy may provide relief to a the student loan debtor under certain circumstances: the chapter 13 can stop collection and garnishment activity, and eliminate other debt problems such as credit card debts and stop a foreclosure; but the debtor will usually emerge from chapter 13 bankruptcy still needing to pay on student loans. (more…)

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Am I Too Young To File Bankruptcy?

Thursday, December 15th, 2011

Although not common, we are seeing more and more twenty-something’s in need of bankruptcy relief. A concern that is sometimes voiced is whether the client is too young to file bankruptcy. I don’t mean in a legal sense—anyone of legal-adult age may file bankruptcy (in fact, even someone under the legal-adult age can file bankruptcy with a representative) —but in a practical sense the client often feels like they should stick it out and see if they can solve their financial challenges without bankruptcy. They think by filing bankruptcy so young, that they are somehow doubly cursed or won’t be able to have the American Dream of home ownership. Such thinking is folly! (more…)

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NOT a Good Idea to Transfer Student Loans to Credit Cards

Saturday, November 19th, 2011

As the looming crisis of student loan debt nears, some enterprising debtors are no doubt getting desperate. Student loan debtors are being hounded by collection agencies night and day, tax refunds are being intercepted, and wage garnishments are inevitable. So some enterprising debtors are getting the idea to transfer their student loan debt to credit cards with the idea of either getting a better deal on interest or later discharging that debt in bankruptcy. Don’t do it! (more…)

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Bankruptcy Student Loan Debt Proposal That Will Help, Make Student Loans Priority Claims!

Wednesday, November 2nd, 2011

An entire generation is emerging from college, graduate school, and professional school already behind the financial eight ball with loads of student loan debt and questionable job prospects. Student loan debt is set to exceed one trillion dollars in the U.S.; that is 200 billion more than the outstanding revolving credit card debt in this country. The sad fact is that it is actually easier to resolve back taxes than it is to resolve back student loan debt. Delinquent borrowers have essentially no options and are allowed to suffer at the whim of collection agencies with the power to garnish tax refunds and sometimes wages and bank accounts without judicial notice or over sight. What I call for is consistency in our law about how we treat student loan debt.

Proposal: Amend bankruptcy code section 507 to make student loans a priority debt. Do not require priority student loan debt to be paid in full within a chapter 13 plan; require all payments to priority student loan debt in chapter 13 bankruptcy be applied to principal only, the student loan shall stop accruing interest, fees, penalties, charges, and expenses during the chapter 13 bankruptcy, and that upon chapter 13 discharge, the student loan borrower shall be deemed current and the loan rehabilitated if a balance is still owed. (more…)

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Legislation for Bankrutpcy Discharge of Private Student Loans Takes Next Step!

Thursday, June 9th, 2011

H.R. 2028, which would make private student loans dischargeable in bankruptcy, has taken the next step in the Congressional legislative process. The bill was introduced by Congressman Steve Cohen (Democrat from Tennessee) on May 26, 2011 and it has 17 co-sponsors including Jarid Polis (Democrat from Colorado). The bill has now been referred to the House Committee on the Judiciary (the next step). (more…)

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What Are The Odds Of Discharging Student Loan Debt In Bankruptcy?

Sunday, April 17th, 2011

Slim! But not impossible! Okay, the real answer: Student loan debt is non-dischargeable in bankruptcy unless the debtor can prove that paying back those student loans would cause an undue hardship. 11 U.S.C. § 523(a)(8). That means that the debtor must file an Adversary Proceeding in bankruptcy court and prove an undue hardship exists. Doing so is no small task; in fact, it is full blown litigation requiring document evidence, expert witnesses, and all the while the other side having unlimited resources using every litigation trick in the book to wear you down (e.g. motions for summary judgment, 8 hour depositions, challenges to evidence you wish to present, not cooperating with discovery, etc). After all, it is official Department of Education policy to oppose bankruptcy discharge of student loan debt. 34 C.F.R. § 674.49(C) and 34 C.F.R. § 682.402. (more…)

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Can I Qualify for Student Loans After Bankruptcy?

Monday, February 7th, 2011

Given the difficult economic times, many individuals are facing career transition and heading back to school to learn new skills. As part of that transition, many of those individuals must file bankruptcy to receive a financial fresh start. At the same time, these individuals must fund their retraining with student loans; so the question arises, can you get student loans after bankruptcy?

Short answer: YES! There exists a little invoked bankruptcy code provision that expressly prohibits student loan lenders from discriminating against potential borrowers because of a previous bankruptcy. For all but truly private student loans, bankruptcy code section 525(c)(1) prohibits lenders from denying student loans because the borrower filed bankruptcy. (more…)

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Student Loan Double Standard, Time For Fresh Approach.

Wednesday, January 12th, 2011

What is the student loan debt double standard? In 2009 Congress passed the Credit Card Act which significantly reformed the lending practices of credit card issuers. One of the hallmark provisions of that act dealt with credit card offers to those under age 21. Congress, in its wisdom, determined that college students were not sophisticated enough to resist the onslaught of credit card marketing, unable to make informed financial decision, and not responsible enough to handle credit cards. So, the Act requires parental signature on credit card applications for anyone under age 21 unless the student can demonstrate means to repay the debt; (more…)

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Archive for the ‘Student Loans’ Category

Can You Pay Student Loans in Chapter 13 Bankruptcy?

Am I Too Young To File Bankruptcy?

NOT a Good Idea to Transfer Student Loans to Credit Cards

Bankruptcy Student Loan Debt Proposal That Will Help, Make Student Loans Priority Claims!

Legislation for Bankrutpcy Discharge of Private Student Loans Takes Next Step!

What Are The Odds Of Discharging Student Loan Debt In Bankruptcy?

Can I Qualify for Student Loans After Bankruptcy?

Student Loan Double Standard, Time For Fresh Approach.

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