Hi there this is Jonathan Ginsberg and I’d
like to talk to you about bankruptcy and student loans. If you’ve read
any of the news magazines or any of the newspapers, you’ve probably seen
that student loan debt has eclipsed credit card debt as the largest amount
of indebtedness that Americans owe. It’s billions and billions
of dollars. I think part of this is that a number of years ago Congress
passed some laws and they establish Sallie Mae and basically student
loans are guaranteed by the government. So what you have is a bunch of 18 and 19-year-old’s
who want to go to college, they sign some papers not really
thinking about what it’s going to be when they’re 26 or 28 or 30. The student
loans are issued at maybe 50, 60, $100,000 or more and they get out of college
and there’s a short window where they have a little bit of a break. I
think six months of a deferment and then the student loans come due. And if
you don’t have a job or if you don’t have a job making very much money then
that student loan debt becomes a real problem. The other thing that Congress did was that
they made student loans very difficult to get rid of within the actual
student loan process the programs there are some grounds to discharge student
loans outside of bankruptcy. If there is extreme hardship but again very
difficult to do. And within bankruptcy you cannot discharge student loans
except in a case of extreme hardship which basically are very difficult
to do. So essentially if you have student loan debt
and you file chapter 7 that student loan debt will simply flow right through
your chapter 7. It will remain your debt after bankruptcy and you’ll
have to continue making payments on it. And really the main reason
people file chapter 7 if they have a lot of student loan debt is to get
rid of their other debts, their credit card debts, so they can go ahead and
pay their student loan debt. In chapter 13 student loan debts are not dischargeable
either. You can choose to pay some of the student loan debt
in your chapter 13 but the balance will basically remain after the chapter
13 is over plus accrued interest or you can pay the student loan debts
directly while in chapter 13 and continue making payments but they basically
will not go away. So I get people calling all the time. I can’t pay this,
I don’t make enough money and right now unfortunately student loan debt
is not going to be dischargeable unless you have extreme medical
hardship and they really mean extreme in other words you’re on your death
bed. You have some terrible disease that you’re not able to work. And
Congress has made it very, very difficult. There’s been some talk about a changing the
student loan rules so that student loans from certain types of institutions,
vocational schools maybe that have poor placement records or that closed
down; those may be dischargeable. I think we should keep our
eye on that but right now as a big picture rule, student loan debt is not
going to be dischargeable, so you’re going to be stuck with it. If that’s
a big problem you’ve got, I might be able to help you anyway just in terms
of let’s figure out a way to get rid of some other debts so you’ll have
the money to pay the student loan. But don’t expect that you’re going to
be able to go into bankruptcy court and get rid of your student loans and
move on down the road. That’s probably not going to happen unless there
is extreme hardship and this really applies not just to the student, the
now grown up student, but if its parental student loans, same thing. If you signed for your child and your child
does not make the payments you cannot discharge that debt just because you’re
older or currently retired. There’s got to be a really, really strong
reason that’s usually not sufficient. Those reasons are not sufficient
being or being retired. It’s usually got to be something medical or really,
really extreme. And again it puts a lot of burden on people. I used
to have a lot of student loan debt. So if you’re facing that if you want to talk
about your options, I’m happy to chat with you. We can talk about how to
clear up some other stuff so you can deal with your student loans. My phone
number is 770-393-4985. Of course, keep posted on my blog at thebklawyer/thebkblog
and I’ll update you if there’s any change in the rules regarding
student loan dischargeability. And again feel free to call me or e-mail me.
I’m happy to chat with you about this. Again, Jonathan Ginsberg 770-393-4985.