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What Is Kentucky Higher Education Student Loan Corporation (KHESLC)

bankruptcy and student loans

bankruptcy and student loans

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 may have been purchased after default by the Department of Education. In cases where a loan is in default you are often able to rehabilitate it. These payments are often just 5 dollars a month.

What Does That Mean To You

However 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 being late. If your only income is social security then your payment is 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 simply removing the history of late payments and reducing the monthly payments to a very small payment or even zero may be better than discharging the debt. If the loan is properly rehabilitated for someone on social security the payments are reduced to zero, the past default history on the credit file may be replaced with a history of on time payment, and the future payments will show an on time payment. Often this may mean that low rate mortgages or section 8 housing purchases become available.

Chapter 13 Bankruptcy

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 closed the stay terminates. If the debt is discharged then the debt is permanently noncollectable. Debts to the government, for private student loans and for domestic support 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 do file adversary proceedings and discharge these student loans when they can prove that paying the debt would be an undue hardship on the debtor and their dependents.

About fourty percent of the time debtors are able to partially or completely discharge student loan debt when they attempt to prove that a student loan is an undue hardship. Our website has an excellent page on how to analyze whether or not your student loan debt can be discharged. In order to file and effectively discharge a Kentucky Higher Education Student Loan Corporation loan the debtor must first exhaust all of his or her personal administrative remedies. This means for government loans a person must at least have applied for an IBR loan. With private student loans 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 all of the programs that can make government loans more affordable bankrupting a KHESLC loan is far more difficult and obtaining administrative relief from KHESLC is far easier than other lenders.