Student loans cannot be discharge in bankruptcy, right? Ninety-nine times out of 100, correct.
Actually, more like 999 times out of 1000.
But there is some good news. I was recently able to eliminate a $35,000 student loan for clients who filed chapter 7. It was not your typical student loan, and that will be the key at the end of the story.
Clients came to me for a chapter 7 bankruptcy. Get rid of credit cards, get rid of home that lender would not consider a modification, and the ugly, dreaded student loan.
Nope, can’t do anything about it. They probably already knew the answer to that before they even walked through the door. Every attorney out there will tell you that you can’t get rid of one.
Unless…. you are disabled. But not all definitions of disabled are the same, and you can be sure the student loan definition for disabled basically means you are dead. Discharging student loans due to disability is impossible.
But for some reason the clients and I talked about this student loan a little bit. Most attorneys would have run right through that one at an initial consultation – “student loans cannot be discharged, let’s move on”.
What I found out should not have shocked me, any parent would have done the same thing. These clients had a troubled child. The child really did need help and was placed in a school for children who needed help. Their child was well under college age, and definitely had not finished high school.
The parents signed a Sallie Mae student loan for over $40,000 for not even one year’s tuition for the “program”.
Well again, as soon as attorneys see the words Sallie Mae, they immediately think nothing can be done and move on withe the rest of the consultation.
But the bankruptcy code references what student loans cannot be discharged. And if you follow from the reference of one statute, to the next statute, to the rule referenced in that, to the regualations in the next…. well, you get the point….
A student loan has to be for higher education purposes. The clients’ child was not even close to having finished high school.
So we decided to fight for dischargeability of the student loan through the use of an adversary proceeding (which is like a small lawsuit within the bankruptcy).
The good news is the following: Sallie Mae’s attorney called within 10 days and agreed to our interpretation.
So a $35,000 student loan balance will be wiped away upon the clients receiving their chapter 7 discharge.
I will do my best to ask questions as to the nature of everyone’s student loan when they come to me for a consultation. You never know, do you?
So yes, there are some situations where bankruptcy can relieve you of a student loan obligation by filing bankruptcy in Florida.
Call 407-749-0080 now for a free consultation… and make sure you tell me about your student loan.