Dear Steve,
I filed Ch 7 in 2008 and had federal & private student loans.
For the student loans in question, I took out federal loans (from Sallie Mae) that paid for the full cost of attendance. These loans are now in a repayment status. I also took out private loans (from Sallie Mae). these loans were not certified by the school and went far above the cost of attendance. I used these loans for personal expenses and basically living beyond my means. I had to provide a copy of my schedule to show that I was in school. Since my BK, Sallie Mae has sued and won a judgement. Should these have been dischargeable?
David
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Dear David,
It is doubtful the federal loans would have been eligible for a discharge even if fought. But you mentioned something very important on the private loans. It seems the private loans were used for living expenses and many people don't realize it but that debt may be eligible to be discharged in bankruptcy, even today.
If your private student loan was used for expenses that were not "qualified higher education expenses" then that part of the loan could be fought for elimination. Now I don't specifically fault your bankruptcy attorney because few people realized this little fact in 2008. And for your bankruptcy attorney to fight this would have required an additional proceeding.
But with more more awareness about the ability to discharge part or all of some private student loans I'm hoping more people will pursue this option.
I've written about this at length and I think you should read this article.
Armed with that knowledge it might be worth setting up a free consultation with a local bankruptcy attorney and discussing if there is a way to fix this issue at this point and ask for a reconsideration of the part of your loans that is eligible for discharge. This will probably require an additional court filing.
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