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Student Debt Discharged in Bankruptcy

The administration is thinking of giving people the opportun cocolawyer02/22/18
I have paid off my debt, but if I graduated with high debt a bucwild02/22/18
I have a high SLD debt load, a home, and two cars (no debt o cocolawyer02/22/18
I am also interested in this answer lolwutjobs02/22/18
Yeah because if I did qualify, and the terms for undue hards cocolawyer02/22/18
Im not a bankruptcy attorney but dont they look to see if yo thirdtierlaw02/22/18
No clue. That is why i am asking. P.S I am barely making my cocolawyer02/22/18
I only have a bare minimum understanding in bankruptcy law, bucwild02/22/18
bump cocolawyer02/22/18
I would love to, but I don't qualify for chapter 7 and would fettywap02/22/18
I’m in line for PSLF...so that would be a disincentive to qdllc02/23/18
I have high SLD, seven years left for PSLF, and a security c futuresandwichartist02/23/18
cocolawyer (Feb 22, 2018 - 5:32 pm)

The administration is thinking of giving people the opportunity to discharge SLD in a substantive manner, by changing the definition of undue hardship to make it on par with other consumer debt.

How many of you would run to file bankruptcy if it changed.

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bucwild (Feb 22, 2018 - 5:38 pm)

I have paid off my debt, but if I graduated with high debt and low income, I'd IBR my payments, pay off my car, save as much as I could for a house, and file for chapter 7 as soon as I purchased the house, before it gained too much equity.

Without a lot of assets, chapt 7 bankruptcy isn't terrible, especially if you don't need immediate credit to buy something like a car or house.

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cocolawyer (Feb 22, 2018 - 6:15 pm)

I have a high SLD debt load, a home, and two cars (no debt on the cars).

My SLD debt is 200k my income however is like 140k...would I typically qualify for a chapter 7?

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lolwutjobs (Feb 22, 2018 - 6:26 pm)

I am also interested in this answer

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cocolawyer (Feb 22, 2018 - 6:29 pm)

Yeah because if I did qualify, and the terms for undue hardship changed. I would file in a heartbeat, keep the house, keep the car, and let my credit go to Sh** for 7 years. Who cares. I will not move or buy a new car for that time anyway.

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thirdtierlaw (Feb 22, 2018 - 6:34 pm)

Im not a bankruptcy attorney but dont they look to see if you've made a good faith effort to pay and whether your monthly debts exceed your income?

If you've been making ends meet for years, I can't see them finding that you can't afford to pay. Also don't they force you into chapter 13 if your income is above a certain level?

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cocolawyer (Feb 22, 2018 - 6:35 pm)

No clue. That is why i am asking. P.S I am barely making my IBR payments with everything else. They are late each month.

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bucwild (Feb 22, 2018 - 10:00 pm)

I only have a bare minimum understanding in bankruptcy law, but I understand there is no income ceiling to file a chap 7- your debts need only exceed your assets. Example- Bernie Madoff filed chap 7 bankruptcy and he had tons of $.

The answer for whether you should file chap 7, as opposed to 13, depends on the value of your assets. For example, if you file chap 7 and you have a lot of equity in your house, you can expect your trustee to sell your house and use the equity to pay off your creditors. Now, you may be in a state with a high homestead exemption (Florida's is unlimited, and you will see many rich, soon to be broke celebrities take advantage of this, such as OJ Simpson), but let's assume that's not the case.

Similar deal with the cars. If you own your cars outright, you can exempt some part of the car, depending on your state laws. So if you own two cheap cars outright, the trustee will almost certainly abandon the car if you can exempt all of the equity in the car. If you own two luxury, paid off cars, and the trustee can get some non-exempt equity from them, you will have to pay the trustee the nonexempt equity to keep your car, or surrender it.

Long story short, if one could discharge student loans in bankruptcy, its almost certainly worth it for high enough balances, but you need to plan to have bad credit for years after. This is much easier if you have a spouse with decent credit.

On another note, you can consider doing strategic defaults now, if you have private loans. I actually helped a friend of mine do a strategic default on his student loan debt recently. Huge risk, but he settled for a little over 50 cents on the dollar and his wife has great credit. So she can buy the houses/cars if needed, and his credit will bounce back in a few years.

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cocolawyer (Feb 22, 2018 - 7:13 pm)

bump

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fettywap (Feb 22, 2018 - 7:53 pm)

I would love to, but I don't qualify for chapter 7 and wouldn't be able to be poor in chapter 13 for 5 years.

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qdllc (Feb 23, 2018 - 7:53 am)

I’m in line for PSLF...so that would be a disincentive to take a BK option. If I had the option a few year back, I’d jump on it. When I first took out loans, I had a right to BK after 7 years of payments in good faith. I’ve been buried in student loans for 15 years now.

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futuresandwichartist (Feb 23, 2018 - 8:07 am)

I have high SLD, seven years left for PSLF, and a security clearance. Years ago I would have jumped at the chance to try for chp 7, but much less likely now.

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