There are some cases where a person cannot obtain the disability discharge but may still be able to obtain an undue hardship discharge in bankruptcy. Kentucky Higher Education Student Loan Corporation “KHESLC” is not the Department of Education. However, a loan may have originated at Kentucky Higher Education Student Loan Corporation and purchased after default by the Department of Education. In cases where a loan is in default, you can often rehabilitate it. These payments are often just five dollars a month for low-income persons.
What Is Kentucky Higher Education Student Loan Corporation (KHESLC)
What does that mean to you? Private contracting servicers often hate to process these requests because they make little or nothing from these requests. A rehabilitation may remove any history of the loan being in default or late. If your only income is social security, then your payment is often zero since social security is not earned income.
Many other sources are not computed in arriving at your household income. In some of these cases, removing the history of late payments and reducing the monthly payments to a minimum payment or even zero may be better than discharging the debt.
Suppose the loan is rehabilitated adequately for someone on social security; the payments are often reduced to zero. In that case, the past default history on the credit file may be replaced with a history of on-time payment, and future payments will show an on-time payment. Often this may mean that low-rate mortgages or section 8 housing purchases become available.
A Chapter 13 bankruptcy may stall a private student loan and may have some temporary benefits. A stay is a temporary court order during the case preventing collection. When the case is closed, the stay terminates. If the debt is discharged, then the debt is permanently noncollectable. Debts to the government and private student loans require the debtor to file an adversary proceeding to discharge the debt. These adversary proceedings are separate trials or lawsuits filed in bankruptcy court. They are expensive, but some debtors file adversary proceedings and discharge these student loans when they prove that paying the debt would be an undue hardship for the debtor and their dependents.
About 40% of the time, debtors can partially or wholly discharge student loan debt when they attempt to prove that a student loan is an undue hardship. Our website has an excellent page analyzing whether or not your student loan debt can be discharged. To file and effectively discharge a Kentucky Higher Education Student Loan Corporation loan, the debtor must first exhaust all of their administrative remedies.
Government v Private student loans.
For government loans, a person must at least have applied for an IBR loan. With private student loan lenders, there are no administrative remedies or ability to make the student loan affordable. Private student loans are therefore supposed to be much easier to discharge through an adversary proceeding. Because of the programs that can make government loans more affordable, bankrupting a KHESLC loan is far more complex and obtaining administrative relief from KHESLC is far easier than other lenders.
In the 2010 case of Espinosa, the Supreme Court decided perfect notice to a student loan lender was not necessary. In some cases, a student loan can be hardship discharged in bankruptcy without first determining undue hardship in an adversary proceeding. An adversary proceeding is a separate lawsuit filed in your bankruptcy case. These adversary proceedings give the…
Student loans are generally not dischargeable unless the court grants you a hardship discharge. In Chapter 13 the debt may be challenged as fraudulent or otherwise being unenforceable. Student loans are not enforceable when the school closes prior to the student completing his education or if the debtor didn’t qualify for the loan or school. Student…
Are you looking for information about your student loan hardship discharge bankruptcy? Below you will find important resources to assist you with better managing or discharging your student loan. First, you must understand that student load discharges are not impossible. So, don’t assume you can’t discharge your student loan. In fact, there might be an…
The US Department of Education offers a student loan disability hardship due to permanent and total disability. The US Department of Education defines total and permanent disability as the inability to work and earn money because of an injury or illness. The illness or disability must continue indefinitely or result in death. First, to qualify,…
Again, no one should assume that their student loan is not dischargeable in bankruptcy. The fact is, every year about 500 people nationwide get student loan discharges. First, you have to prove that you do not have enough income to cover basic health care and essential food, shelter, and clothing if you continue to pay…
In regard to student loan hardship repayment plans, there was once a requirement that people first attempt an Income Contingent Loan Repayment Plans (ICRP). However, that was overruled in Kentucky. I refer you to Circuit Barrett v Educational Credit Management Corp 487 F 3rd 353 2007 where a medically disabled person was asked by ECMC…
What does that mean to you? Private contracting servicers often hate to process these requests because they make little or nothing from these requests. A rehabilitation may remove any history of the loan being in default or late. If your only income is social security, then your payment is often zero since social security is not earned income.
