Are you struggling with managing your student loan and need a fresh start? As a Louisville Kentucky student loan lawyer, I handle many student loan collection defenses and lawsuits. Additionally, I have taught other lawyers with Morgan King, co-authored a book about it, and graduated from training for it. I am often able to file bankruptcy cases to stop student loan collections or discharge the student loan debt when paying is an undue hardship for my clients. When I’m your lawyer, I give you a complete analysis of how to manage your student loan debt on our website and with in-person appointments.
Student Loan Collection Defense Lawyer
⎆ Successful student loan discharges.
The bankruptcy code tries to make student loans non-dischargeable. Nonetheless, every year there are approximately 250 undue hardship case filings that grant undue hardship discharges student loans. About 500 cases are successful every year in getting one of the hardest discharges possible which is the “undue hardship student loan discharge.” Although four studies all agree that without an attorney and without money to file the case people are able to often do this themselves. It is often done without an attorney because attorneys believe they can’t do it. They also may not know how or they may not want to do the work.
Iuliano in his study found debtors obtained discharges 39% of the time. Pardo and Lacey found 57% of the time debtors got a partial or complete discharge. Bayuk is the third study older study but there are more recent law articles and studies as well. Ryan Freeman at Emory did an empirical study. Richard B. Keeton wrote on how Brunner has evolved into newer and better tests for undue hardship.
⎆ Successful income-driven plans.
The fact is, almost everyone can make their government student loans affordable with a proper income-driven repayment plan. The problem is often the servicer’s profits are linked to how high the payments are. The higher the payments the more the servicer or debt collector makes. This article explains just some of the solutions that make most student loans affordable. Unless you know how to manage the debt and what the servicers and student loan debt collectors are doing getting a fair loan becomes difficult or impossible. Just read the article Student loan reform: Rights under the law, incentives under contract and mission failure under ED. This is because often the servicer or debt collector you trust and deal with is interested in charging you the most he can get from you and is not interested in helping you.
⎆ The student loan collection defense lawyer checklist.
This is a checklist of questions to qualify for programs to discharge your loan. For instance, your loan may be dischargeable in bankruptcy if the school does not qualify, you did not qualify as a student, the course is not qualified or the loan was for more than the cost of attendance.
Also, private student loans must sue to collect. They have little or no income-based repayment plans to make them affordable so they are more likely to be discharged as an undue hardship. If the private student loan has no affordable option and causes an undue hardship it becomes dischargeable in bankruptcy.
Government loans have several repayment options and you have methods either to make loans affordable or to avoid payment. For instance, if a loan attempts to garnish wages or social security, you can file a Chapter 13 with a minor monthly payment and stop collections. If the government loan is a hardship even with income dependent terms an undue hardship discharges in bankruptcy is possible. Finally, there are also Administrative discharges for disability, death of a cosigner, closed schools, and other events.
To be dischargeable, the loan must be a “qualified educational debt” as defined by 11 USC 523(a)(8)(B) and 26 USC 221(d)(1). To be a “qualified higher education debt,” the expenses, cost of attendance, eligible educational institution status, and the student must all be eligible under these definitions. These limits on school loans are defined and hidden in the IRS code and section §472 of the Higher Education Act of 1965 (20 USC 1087ll). You would think the bankruptcy code would define or repeat all the requirements. However, most of it is not in the bankruptcy code.
- Only debts that were made to “eligible” students are non-dischargeable in bankruptcy. If you were not qualified to attend a college, the loan is dischargeable.
- Only qualified higher educational expenses are non-dischargeable. The debt must be “incurred solely to pay qualified higher-education expenses” under 26 USC 221(d)(1) and 11 USC 523(a)(8)(B). Loans which mix school and paying other debts like credit cards or improvements are not eligible under 26 CFR 1.221-1(e)(4). Private schools will often offer loans that are for more than the cost of attendance. This makes the loan dischargeable. Also, debts directly to the school are dischargeable, such as bills from a school for housing and even tuition.
- Only loans made for attendance at qualified schools by qualified students under 26 USC 221(d)(1)(C) and USC 523(a)(8)(B).
⎆ Loans for some schools do not qualify and are dischargeable.
First, only attendance at an accredited educational institution is non-dischargeable. Your loan is dischargeable in bankruptcy if you attended an unaccredited school. Harvard is an accredited school. Bill’s school of scuba diving, sky diving, or truck driving probably isn’t. Accredited schools are Title IV institutions and a qualified education loan is “indebtedness incurred by the taxpayer solely to pay for qualified higher education expenses.” 26 USC 221(d)(1).
If your school is not listed it is probably not an accredited and qualified school. Also if you could not benefit from the school program you may also be able to discharge the debt. Individuals who never able to graduate high school or obtain a GED are examples of persons who could not benefit from a college course.
⎆ Veteran student loans are dischargeable in bankruptcy.
Second, some loans have separate statutes that allow a discharge. For instance, VA student loans are discharged after five years 38 USC 303 a(e)(4). The Department of Defense also issues loans that are dischargeable after five years under 20 USC 6674(f)(3). The Troops to Teachers program bars any discharge even if it is an undue hardship. Heal loans use an unconscionable standard.
⎆ The undue hardship standard for bankruptcy discharge.
Third, student loans are dischargeable if payment would be an undue hardship for the student or his dependents. If you can’t afford food, shelter, or medical care the loan is probably an undue hardship. Private loans are easier to discharge under this standard because they have no income-based repayment plans to make these private loans affordable. Under the Brunner test, the student loan is dischargeable in bankruptcy if:
- The Debtor cannot repay and maintain a minimal standard of living.
- The situation will continue for a significant portion of the repayment period.
- The Debtor has made good faith efforts to repay.
Undue hardship discharges require that the Debtor has done all he could to try an income-based repayment before filing an adversary case for undue hardship in bankruptcy court. Obtaining an undue hardship is one of the hardest things a student loan lawyer can attempt but it is not impossible. The Brunner standard is becoming more and more unpopular and it is becoming more and more popular to look at the future of the debtor than past payment. Some courts use Overall circumstances and the Anderson tests. The proposed legislation allows discharges
⎆ Qualifying your loan for administrative discharges.
Fourth, the loan might qualify for an administrative discharge or another program. The nice part is, many administrative discharges or rehabilitations are simple, short forms. Interestingly, our office and Salt have listed over 60 programs that repay the loan or help repay the loan. For your further information, the following are just some of the more popular administrative discharges found on StudentAid.Gov:
- Stolen Identity
- Closed School
- Unauthorized Signature
- Public Service
- Disqualified Status
- Unpaid Refund
- Inability to benefit
- Unaccredited school
- Public Service
- Teacher Service
- Perkins Cancellation
- Borrower Defense to Repayment School failure to perform
- False Certification
⎆ Private vs. government student loan collections.
Fourth, government loans can seize wages, bank funds, tax refunds, and social security benefits without going to court. Private lenders have to sue and win to collect. That may be hard or impossible for private loans. Private loans have higher interest rates, often rely on cosigners, and have no income-based repayment programs. This makes private student loans more likely to be an undue hardship and easier to discharge.
Also, many of the same defenses you make against a credit card debt such as the statute of limitations are valid against private student loans. However, government student loans are exempt from many of the same defenses. You need a student loan attorney who knows how to handle these cases.
If your debt is a private student loan, it is often bought, sold, and resold. If so it may be uncollectible. There are at least 100 defenses to any lawsuit by a private student loan debt collector including the statute of limitations. We commonly look at about 63. Private loans must sue to collect. The common defenses include:
- Statute of Limitations
- Lack of Standing
- FDCPA, TILA
- Identity theft
- Business Records
- Improper Venue
⎆ Your Louisville, Kentucky student loan collection defense lawyer.
This is just a partial list of some of the items to consider if you have student loan issues. So, if you are suffering from an abusive situation with a student loan, contact my office right away to start the conversation. Nick C. Thompson, Attorney: 502-625-0905