310.376.9865
There are several types of debt that are non-dischargeable under the bankruptcy law.
One of the loans that are non-dischargeable is the student loan.
Not only does a bankruptcy NOT discharge a student loan, but student loan lenders are also provided further protection. Lenders are NOT required to follow truth in lending laws, there are NO statute limitation for student loans, nor to state usury laws apply.
Collection agencies are allowed to garnish wages, tax returns, social security benefits, and disability benefits. Professional license’s may be suspended, termination of public employment, and denial of security clearance.
Do you get the feeling that the cards are stacked against the debtors who take out student loans.
In my opinion, student loans are the worst loans. They will just not go away. They are only discharged in bankruptcy under a very narrow exceptions:
- “Undue hardship” A student loan may be discharge if the court finds there is undue hardship. Undue hardship is not defined in the bankruptcy code. Under case law the most widely used test to determine if the student loan is dischargeable is the “Brunner Test.” The debtor applying for a student loan discharge must pass three prongs: a. The debtor must suffer a condition that will persist for a significant period of time, i.e. a disability preventing the debtor from working. b. Income, the debtor’s income must be below a level where he would be unable to maintain a minimal standard of living if he were forced to repay the student loan, or below the poverty line. c. The debtor has made a good faith effort to repay the student loan. One factor that may be considered, has the debtor enrolled in the Income Contingent Repayment Plan.
- Qualified Education Loan: The Private Student Loan must be a School Certified loan. A Non-School-Certified loan does not satisfy the requirements for a Qualified Education Loan, and is determined on a case by case basis, as there are numerous factors to consider.
- Funded by Non-profit: 11 USC 523(a)(8)(A)(i) excepts from discharge any education loan “made under any program funded in whole or part by a nonprofit institution. Loans funded, not loans guaranteed by non profit institutions.
Student loans may sound good, but going back to a basic maxim, “The easiest thing in the world is to borrow money, the hardest thing in the world is to pay back money.” This is true of student loans, however there is usually no relief if you cannot repay the loan.
This is offer as information only and not legal advice
- Law Offices MJ Mann Bankruptcy Attorney
- 2706 Artesia Blvd, Suite BK
- Redondo Beach, CA 90278
- 310.376.9865
