Huffpost Business
THE BLOG

Featuring fresh takes and real-time analysis from HuffPost's signature lineup of contributors

Steve Rhode Headshot

My Attorney Said There Was No Hope for My Student Loans. - Michael

Posted: Updated:
Print

Huffington Post Reader Question

Dear Steve,

Im going through bankruptcy but my attorney said no to trying to discharge student loans.

I currently have almost 300,000 in student loan debt with Sallie Mae, most of which is 'private loan' vs 'government backed'...

I started these loans, with my father as a co-signer, in 2001 until 2008. As of 2011, I started re-paying them in a 'reduced interest' program to lower my payment. Without the program my payment would be $2500+ a month. Now I pay $1090....even that is too much. I 'll be paying it off till the day I die and its still so high that I have filed for bankruptcy. I cannot afford a car ....much else...its depressing. I have my 341 hearing on Aug 7th. my attorney flat out told me my loan wont be discharged.

How can I find out if my school wasn't a "eligible education institution"....the first school I went to was Brooks College, a for profit fashion design school which is now closed. The second school which I transferred to was American Intercontinental University...I know for a fact that they lost their 'accreditation' for sometime during my time there but did get it back...its since closed its doors too.

Also regarding "qualified education loan(s)" ...My financial aid advisors borrowed more money than needed for tuition as well, such as living expense etc, would that fall into the category?

Michael

Don't miss my free my weekday email newsletter with the latest tips and advice on how to beat debt and do better financially. Subscribe now. - Click Here

Dear Michael,

I am not a bankruptcy attorney. I am a writer and researcher. So what I can tell you definitively is not if your bankruptcy attorney is right or wrong but what the cases I've reviewed and written about show.

In These Private Student Loans Can Be Easily Discharged in Bankruptcy I go into detail about the accreditation, provide a link to check and give examples of what is not a qualified higher education expense.

I also provide actual case examples that show loans matching these criteria being discharged without a fuss.

It would seem that further investigation into if the school was accredited or not that you attended is critical to making a determination if the private student loans could be discharged. This effort to discharge the loans does not apply to federal student loans.

However, my recent research showed quite a number of federal student loans discharged in 2012. And even if the loans are not full discharged, there still appears to be a benefit to pursuing an adversary proceeding to work out a better deal.

The 2012 data on federal student loans in bankruptcy showed 47% were discharged in full, 21% resulted in a better payment, and 12% settled for less than was due.

It also seems critically important to understand if there still is a cosigner on your loans or the cosigner was released.

It would be interesting to know exactly why your bankruptcy attorney feels there is no hope. Is it because he feels the loans can't be helped in any way or that he does not want to file an adversary proceeding to try for a discharge or adjustment.

Here are a couple of more research articles to review, here and here.

Before I go I wanted to leave you with three easy action items you jump on right now to address your situation. Just click here.

Please post a comment with updates so I can stay tuned on what happens.



Get Out of Debt Guy - Twitter, G+, Facebook

If you have a credit or debt question you'd like to ask, just click here and ask away.

If you'd like to stay posted on all the latest get out of debt news and scam alerts, subscribe to my free newsletter.

I'd like to invite you to participate in the Get Out of Debt Guy Support Group. Everyone is welcome.