Category Archives: Student Loans
If you were to ask a person on the street about bankruptcy, one of the most well-known rules is “you cannot discharge student loans.” In 2005, the Bankruptcy Code was amended under a law called the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA). In that law, student loan debt was categorized as non-dischargeable under federal statute. The only silver lining for individuals hoping to discharge student loans was that the section said the loans could not be discharged “unless it would impose an undue hardship.” Like many laws written by Congress, this language was left for Courts to interpret. Some courts have been favorable to students and have discharged student loan debt in certain circumstances; some have not. The one unifying factor for all courts has been that if you want to attempt to discharge your student loans, it will take time and money and there are no guarantees….
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By STEVEN LONG Many people seeking the relief afforded by bankruptcy want to file a Chapter 7 bankruptcy. I have heard initial disappointment from some in discovering that they do not actually qualify for a Chapter 7. They filed too recently, their income is too high to qualify or because they had property that they wanted to keep. In truth, Chapter 13 bankruptcy is not a compromise. It is often the case that everything Chapter 7 can do, Chapter 13 can do better. Power 1: Saving the House If an individual is behind on mortgage payments, a Chapter 7 bankruptcy is a bad solution for that problem. A Chapter 7 can cancel a foreclosure sale but does effectively nothing to bring the account current. What is often seen as a strength of Chapter 7 is its weakness here – Chapter 7 cases are brief. As is the protection they afford….
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The sad reality for most of my student loan clients is they have large federal and private student loan balances. In many cases they also have co-signors, usually a parent or relative, who will be on the hook if the main borrower defaults. Federal loans can be consolidated and placed in affordable repayment plans, but private loans are usually another story. That said, there are options for dealing with private loans, even if you are in default. (1) Check your Statute of Limitations period (“SOL”). All states have SOL deadlines for creditors to file collection lawsuits. If the SOL has expired on a private student loan, the creditor is out of time to sue and obtain a judgment unless you make a voluntary payment to extend the SOL period (federal student loans do not have an SOL). If sued after the SOL has passed, you still need to raise the…
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