Tuesday, October 4, 2022

Can I File Bankruptcy On Sallie Mae Student Loan

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What Happens When A Private Student Loan Is Charged Off

Sallie Mae Student Loans | How To Delete Sallie Mae And Navient Student Loans?

About 4-6 months after you miss your first payment, your loan will default and then charge-off. When that happens, your loan will usually be sent to your lenders collection department. From there, your loan can stay there for a few months, or it will be sent to a debt collection agency. Collection fees.

Consider Hiring A Lawyer

While you dont technically have to go through a lawyer when filing bankruptcy on student loans, bankruptcy can be an incredibly complex process. It requires determining which type of bankruptcy youll file for and submitting an extra lawsuit, called an adversary proceeding . Going through it all alone could mean extra time, incorrect filings and, possibly, a lost case.

However, one thing to consider is that hiring a student loan lawyer could actually hurt your chances for discharging your student loans in bankruptcy, according to Fuller. Thats because some judges may feel that if you can afford fees for an attorney, then you can afford to be paying back something on your loans, which would disqualify you from experiencing undue hardship.

If you dont know a lawyer, dont worry. You can find one through the American Bar Association. You might be eligible for a lawyer at no cost to you through the Legal Services Corporation, an independent nonprofit created by Congress that offers financial support for civil legal aid to low-income Americans. Just make sure you pick a lawyer that specializes in bankruptcy and has very good reviews.

If you opt to handle your case yourself, a recent study by the American Bankruptcy Journal noted that debtors without a lawyer were just as likely to have their student loans discharged by a bankruptcy judge as those who worked with an attorney.

How To Prove Undue Hardship For Student Loans

To discharge student loans via bankruptcy, you will have to prove they pose an undue hardship during your adversary proceeding.

The U.S. Bankruptcy Code doesnt define undue hardship, so bankruptcy courts have different interpretations for its meaning. Most use whats known as the Brunner test to determine whether bankruptcy filers student loans meet the undue hardship standard.

You must prove that you meet all three parts of the Brunner test to get your college debt discharged:

1. Making student loan payments would keep you from maintaining a minimal standard of living based on your current income and expenses. To meet this, you generally must have bare-bones expenses and must have done everything in your power to increase your income, without success.

2. Additional circumstances make it very likely that your financial situation will persist for a significant portion of your remaining loan period. Among other things, you may be able to successfully meet this if you have a serious mental or physical disability, received a poor-quality education or have maximized your income potential in your field.

3. Youve made “good faith” efforts to repay your loans. You may meet this prong by making some loan payments, attempting to negotiate a payment plan and working to slash unnecessary expenses and increase income.

Different jurisdictions and judges have different interpretations of these standards so your outcome will depend on your location and the judge you get.

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Four Options To Cure A Defaulted Student Loan

Now, in order to get your student loan out of default, you have four options:

Consolidate the loan

Enter a loan rehabilitation program

Pay the loan off completely

Get the loan totally discharged or canceled

The last two are probably not realistic options. I know you dont have the money to pay off the loan. Thats why youre in this predicament and loan cancellations are rare . Youll likely have to rehabilitate your loan or consolidate.

Cancer Student Loan Deferment

Can You File Bankruptcy On Sallie Mae Loans

The 2019 Department of Education Appropriations Act has a section that says your student loans can be deferred while youre in cancer treatment and for six months afterward. However, there have been instances when student loan servicing companies have refused to grant cancer deferments.

If you run into trouble getting your student loan payments deferred due to a cancer diagnosis, contact the Consumer Financial Protection Bureau and your congressperson. One cancer patient had success after she contacted a CNBC reporter.

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When Are Education Loans Made By Private Lenders Dischargeable

Section 523 of the Bankruptcy Code protects three types of education debt from discharge:

  • loans and benefit overpayments backed by the federal government or a nonprofit
  • qualified private educational loans
  • obligations to repay funds received as an education benefit, scholarship, or stipend.
  • If a loan meets one of those three requirements, you can get rid of it only if you prove you meet the undue hardship standard. Specifically, youâll have to show two things:

    • you made a good faith effort to repay the debt
    • your current and future financial situation doesnât allow you to maintain a minimal standard of living while making student loan payments throughout the repayment period.

    However, not every private student loan meets the requirements to be excepted from discharge. Private student loans can be discharged without proving undue hardship if:

    • a nonprofit did not back the loan
    • the loan exceeded your cost of attendance
    • the loan was not a conditional grant of money like an ROTC scholarship

    Alternatives To Bankruptcy For Student Loans

    Since bankruptcy can be an expensive and cumbersome process, most experts see it as a last resort for borrowers. Consider bankruptcy after youve exhausted all other options, like debt consolidation, credit counseling and negotiating with creditors for a lower payment or interest rate.

    If youre balancing student loan payments with other expensive, dischargeable debts like credit cards and medical bills, then bankruptcy may be able to provide relief. But if student loans are your only concern, consider these alternatives.

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    If You Do Decide To File: The Undue Hardship Argument

    As you can see, making this decision depends entirely on your circumstances, especially on a realistic assessment of your financial prospects. Will you make more money in the next few years, or will your current income level and student loan payment remain the same over time? If you go ahead with a personal bankruptcy filing, your first step will be to consult a bankruptcy attorney and decide which type of filing to initiate. Most personal bankruptcies are filed under Chapter 7 or Chapter 13 .

    Whichever type of bankruptcy you choose, you should make an effort to prove youd undergo what is called undue hardship if you were forced to repay your student loans. The hardship in question is, of course, financial. Successfully proving that contention is the only way under current law to convince the court to rid you of your student loan obligations, and while different courts set different bars for proving undue hardship there are general guidelines that apply in every state.

    Your student loans will not automatically be considered for discharge, but you will need to file a special petition in your case in order to bring that about. When you have raised that issue, then the courts review of your personal financial circumstances will require you to pass the following tests to satisfy the requirements for undue hardship.

    How Can You Get Out Of Student Loans Legally

    How Can Bankruptcy Help You Deal with Non-dischargeable Student Loans?

    Unfortunately, you cant declare bankruptcy to discharge student loans, except in the rare case that you can qualify for undue hardship. Before 1976, you could more easily go to the courts and ask them to discharge all of your student loans if you were struggling to pay them.

    Then, through 1998, legislation passed that put a five to seven-year waiting period before you could declare bankruptcy to get out of paying student loans. Since then, laws have become increasingly strict. As of 2005 legislation passed closing off the possibility of discharging your private student loans through bankruptcy altogether, except in very specific circumstances.

    Why did the door close on declaring bankruptcy on student loans? Handing out student loans is risky for both the government and the private lenders who offer student loans. The borrowers often have little to no credit and dont yet make enough to support their repayment.

    If lenders were determining student loan interest rates based on associated risk, the interest rates would be quite a bit higher than they currently are. Essentially, removing the option for most borrowers to declare bankruptcy on student debt puts the lenders in a slightly less risky position.

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    Bankruptcy And Financial Aid

    This page answers common questions about the relationship between bankruptcy and financial aid, such as student loans. The first answer concerns the impact of bankruptcy on eligibility for student loans. The second answer discusses whether student loans can be discharged through bankruptcy.

    Thanks to Pat Somers of the Univ. of Arkansas at Little Rock and Art Bilski of the Illinois Student Assistance Commission for their assistance with this section.

    Bankruptcy and Eligibility for Financial Aid

    Will a bankruptcy affect a students future eligibility for student loans and other financial aid?

    The answer to this question is a complex one because several issues are involved. It depends on the nature of the student loan programs and the type of bankruptcy.

    Whatever the circumstances behind the bankruptcy, the student should talk with the financial aid administrator at the school he plans to attend, and explain the situation. The financial aid administrator may be able to guide the student to certain loan programs or lenders that may fit his needs.

    Generally speaking, a bankruptcy should have no impact on eligibility for federal student aid.

    The anti-discrimination rules appear in 11 USC 525:

  • In this section, student loan program means any program operated under title IV of the Higher Education Act of 1965 or a similar program operated under State or local law.
  • Discharging Student Loans Through Bankruptcy

    • if the borrower files an undue hardship petition

    Types of Bankruptcies

    Private Student Loans Bankruptcy Legislation

    Since 2005, members of Congress have introduced legislation to restore the dischargeability of private student loans without having to prove undue hardship. To date, no

    • The Fresh Start Through Bankruptcy Act of 2021. Sponsored by Senators Dick Durbin and John Cornyn . If passed, this bill would allow borrowers to discharge federal and private student loans 10 years after the first loan payment comes due.
    • Private student loan Bankruptcy Fairness Act of 2019. Re-introduced by Congressmen Steve Cohen , Danny K. Davis , and Eric Swalwell on August 3, 2021. This Act proposes to make student loans made by private lenders automatically dischargeable in bankruptcy without the need to file an adversary proceeding.
    • Medical Bankruptcy Fairness Act of 2021. Sponsored by U.S. Senators Tammy Baldwin , Sheldon Whitehouse , Sherrod Brown , Elizabeth Warren , and Richard Blumenthal . This Act would allow âmedically distressed debtorsâ to wipe out their student loans without having to meet the undue hardship standard or pass the Brunner Test.

    If Congress passes any of these, the law will apply to borrowers who filed bankruptcy after the date of the legislation is passed. It would not apply retroactively to people who already received a discharge.

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    Minimal Standard Of Living

    The first factor that will be taken into consideration is your ability to maintain a minimal standard of living for yourself and your dependents given your student loan debt and monthly payments. This does not mean that only people living in poverty with no possessions will satisfy this requirement. Courts will look at your monthly income and your monthly expenses including the amount necessary to repay your student debt. The purpose of this is to determine the reasonableness of your budget as a whole.

    A minimal standard of living includes, among other things, furnished and maintained shelter, basic utilities, food, clothing, vehicles, insurance, and even the ability to pay for a source of recreation. Again, the court will look at the reasonableness of each of these expenses.

    This prong can be tough to meet for individuals with federal student loans due to the fact that there are income-driven repayment plans available, which can greatly lower monthly payments. If your monthly student loan payment is $0 or something close to that, it is hard to argue that such a small amount is preventing you from sustaining a minimal standard of living. However, it is possible for an individual to have unaffordable payments even while on an income-driven repayment.

    Courts may also consider the individuals spouses income in addition to the individuals income when determining the minimal standard of living even if the individuals spouse has not declared bankruptcy as a co-debtor.

    Overview Of An Adversary Proceeding To Discharge Student Loans In Bankruptcy

    Can You File Bankruptcy On Sallie Mae Loans

    It doesnât matter what type of bankruptcy is filed. Student loan borrowers in both Chapter 7 and Chapter 13 bankruptcy can bring an adversary proceeding against to discharge student loans. But, since Chapter 13 bankruptcy requires a payment plan and involves filers with a monthly income sufficient to make monthly payments, showing undue hardship is more difficult.

    The purpose of the adversary proceeding is to show the bankruptcy court that your current income isnât enough to maintain a minimal standard of living while having to make student loan payments. If you can make this showing, the bankruptcy discharge will give you a true fresh start by wiping out your student loan debt.

    Why do people say student loans canât be discharged in a bankruptcy proceeding?

    Because itâs not automatic like it is for credit cards or other personal loans. It takes an extra step, and bankruptcy courts have often made it hard for student loan borrowers to discharge student loans. Thereâs the Brunner Test, for example, which requires you to show that youâve made a good faith effort to pay back your loan.

    If you havenât made student loan payments, that can be held against you, even if you had a deferment. You also have to show that your inability to make student loan payments will continue for a significant portion of the repayment period for the loan.

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    How Can I Increase My Current Loan From Sallie Mae

    How can i increase my current loan from sallie mae?

    i need more money on my current loan from sallie mae, how do i go about making a request for a higher amount. this loan is a student smart loan and is not a stafford loan. please help me! I running low on time!

    Answer : I would recommend you to try this website where you can get from the best companies: .

    Related :

    i need more money on my current loan from sallie mae, how do i go about making a request for a higher amount. this loan is a student smart loan and is not a stafford loan. please help me! I running low on time!

    i need more money on my current loan from sallie mae, how do i go about making a request for a higher amount. this loan is a student smart loan and is not a stafford loan. please help me! I running low on time!

    i need more money on my current loan from sallie mae, how do i go about making a request for a higher amount. this loan is a student smart loan and is not a stafford loan. please help me! I running low on time!

    i need more money on my current loan from sallie mae, how do i go about making a request for a higher amount. this loan is a student smart loan and is not a stafford loan. please help me! I running low on time!

    How Student Loans Become Delinquent

    As you probably already know, defaulting on a student loan is a very serious matter. A federal college loan falls into default status if you are supposed to make monthly payments, but have not done so for 270 days. For those whose student loan payments are less frequent, a default occurs once you havent made payments for 330 days. In either case, the government has the right to take your federal tax refund check or garnish up to 15% of your disposable pay in order to collect on a defaulted federal student loan. Defaulted student loans also negatively impact your credit.

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    What To Know About Bankruptcy

    There are two types of bankruptcy: Chapter 7the most commonand Chapter 13. In both cases, if youre successful in filing, you wont have to repay certain debts, and wage garnishment and other debt collection activities will end.

    Chapter 13 bankruptcy gives filers who have a consistent income a payment plan to pay off debts within three to five years. The remaining debt is discharged after that time. Under Chapter 7 bankruptcy, theres no payment plan, and discharge can happen sooner, but your eligible assets will be sold to pay off your debts. After that, any remaining debt will be discharged.

    In both cases, theres a downside: The bankruptcy will appear on your credit report for 10 years if you file for Chapter 7 and seven years if you file for Chapter 13. And unless you choose Chapter 13, you might also lose the collateral you put up to back secured debt, like a mortgage, that hasnt been paid and has a lienor a legal claimagainst it.

    Related: 7 Easy Ways To Rebuild Your Credit After Bankruptcy

    If I Have A Sallie Mae Student Loan Can I File Bankruptcy And Wipe It Away

    Is This The SECRET To Pay Off Student Loans FAST? | Sallie Mae Accelerate

    If you attended an expensive four-year college, chances are good that you graduated with a heavy burden of student loan debt. In a tight economy, millions of American graduates who can’t find steady employment are struggling to repay their education loans. While these credit facilities typically carry lower interest rates than riskier credit cards and personal lines of credit, their sheer size can create an overwhelming burden. Every year, thousands of Americans who can no longer keep up with their ballooning student loan balances are forced to declare bankruptcy.

    When you file for bankruptcy, you’ll be able to use a process known as “debt discharge” to escape liability for many of your unsecured debts. These typically include outstanding credit card bills, personal loans, business loans, unsecured lines of credit, medical bills and court judgments. You won’t be able to escape liability for secured debts tied to specific assets. Mortgages, vehicle loans, and rent-to-own purchases are the most common types of secured debts. During the bankruptcy process, you stand to lose all of the assets that you obtained using secured loans.

    If you file a Chapter 13 bankruptcy, it’s more likely that your student loan debt will be restructured. In rare circumstances, you may be able to petition your presiding judge for an “undue hardship” designation. You’ll need to prove that a physical disability or other impairment consigns you to permanent underemployment.

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