Bankrupt Sallie Mae?

[Becca88]

Hello. My mother in-law filed for bankruptcy in Pennsylvannia last year (2005)...she insists the $25,000 in loans she got from Sallie Mae were discharged. She now pays a monthly payment ($75) to the court to distribute to ALL of her lenders (credit cards, etc.) for a period of 3 years and then she's done. I thought you couldn't bankrupt student loans? I told her this, but she insists its included in the bankruptcy. Is this possible? Would hate for her to later not realize that this is still outstanding and they can come after her.

[TxQuiltGirl]

Improbable. See the case pinned above called "Reynolds" ... it discusses one of the few cases in which SLs were BKd.

[Becca88]

Improbable. See the case pinned above called "Reynolds" ... it discusses one of the few cases in which SLs were BKd.

 

I apologize. This is my first day on this forum. I didn't see that case, "Reynolds"...where can I find?

[Becca88]

Improbable. See the case pinned above called "Reynolds" ... it discusses one of the few cases in which SLs were BKd.

 

Hi again. I found the "Reynolds" case.....read it...none of the creditors is Sallie Mae.....does not being able to bankrupt student loans apply to ALL lenders....they are all federally insured? She thinks they are discharged....will they come after her later? or should she pull her credit report to see what it says?

Any suggestions?

[LynnInMN]

Hello. My mother in-law filed for bankruptcy in Pennsylvannia last year (2005)...she insists the $25,000 in loans she got from Sallie Mae were discharged. She now pays a monthly payment ($75) to the court to distribute to ALL of her lenders (credit cards, etc.) for a period of 3 years and then she's done. I thought you couldn't bankrupt student loans? I told her this, but she insists its included in the bankruptcy. Is this possible? Would hate for her to later not realize that this is still outstanding and they can come after her.

 

 

She needs to talk to her attorney. Sallie Mae is included in the Bk but at the close of the Chapter 13, the balance is NOT discharged. It will come due again after the BK is discharged.

[ceb72]

Yes it sure will. I received my paperwork from Sallie Mae today.

[TxQuiltGirl]

Yes it sure will. I received my paperwork from Sallie Mae today.

 

 

It is EXTREMELY rare. There has to be some very serious undue hardship for this to happen. And since the OP intimates that her MIL filed Ch 13, it's highly unlikely that these loans will be discharged.

[Becca88]

Yes it sure will. I received my paperwork from Sallie Mae today.

 

 

It is EXTREMELY rare. There has to be some very serious undue hardship for this to happen. And since the OP intimates that her MIL filed Ch 13, it's highly unlikely that these loans will be discharged.

 

 

Just so you know, my mother in law called Sallie Mae.....she declared chapter 13 summer 2005....they said your balance is zero and your loan is discharged. By the way.....the loan was a Sallie Mae PLUS loan....student loans that parents take out to pay for their kids college. Is it that these PLUS loans can be discharged, they are not federally insured....or do you think the Chapter 13 in Pennsylvannia just takes care of it?

[LynnInMN]

Yes it sure will. I received my paperwork from Sallie Mae today.

 

 

It is EXTREMELY rare. There has to be some very serious undue hardship for this to happen. And since the OP intimates that her MIL filed Ch 13, it's highly unlikely that these loans will be discharged.

 

 

Just so you know, my mother in law called Sallie Mae.....she declared chapter 13 summer 2005....they said your balance is zero and your loan is discharged. By the way.....the loan was a Sallie Mae PLUS loan....student loans that parents take out to pay for their kids college. Is it that these PLUS loans can be discharged, they are not federally insured....or do you think the Chapter 13 in Pennsylvannia just takes care of it?

 

She cant be discharged....even her BK is not discharged yet if she is still making payments. This makes it obvious that SM doesnt know what they are talking about@

 

PLUS loans are Federally insured loans. Due to the BK stay, more than likely the balance has been zeroed out on SM's computer as they cannot collected on it during the automatic stay. Generally as a safety measure the accounts are put into BK status or locked down, so talking to a SM rep is NOT reliable. It is also possible that the loan itself has been transfered or was defaulted prior to the BK.

[Becca88]

Yes it sure will. I received my paperwork from Sallie Mae today.

 

 

It is EXTREMELY rare. There has to be some very serious undue hardship for this to happen. And since the OP intimates that her MIL filed Ch 13, it's highly unlikely that these loans will be discharged.

 

 

Just so you know, my mother in law called Sallie Mae.....she declared chapter 13 summer 2005....they said your balance is zero and your loan is discharged. By the way.....the loan was a Sallie Mae PLUS loan....student loans that parents take out to pay for their kids college. Is it that these PLUS loans can be discharged, they are not federally insured....or do you think the Chapter 13 in Pennsylvannia just takes care of it?

 

She cant be discharged....even her BK is not discharged yet if she is still making payments. This makes it obvious that SM doesnt know what they are talking about@

 

PLUS loans are Federally insured loans. Due to the BK stay, more than likely the balance has been zeroed out on SM's computer as they cannot collected on it during the automatic stay. Generally as a safety measure the accounts are put into BK status or locked down, so talking to a SM rep is NOT reliable. It is also possible that the loan itself has been transfered or was defaulted prior to the BK.

 

It never went into default. The PLUS loan is listed along with all the other unsecured creditors on her papers. You would think they would have to notify this woman that the loan is not done. That seems very unfair. Neither the Judge nor bankruptcy attorney has advised that it's not done. Except for $15,000 in other loans, the bulk of it was student loans....otherwise there would have been no reason to file.

[LynnInMN]

Yes it sure will. I received my paperwork from Sallie Mae today.

 

 

It is EXTREMELY rare. There has to be some very serious undue hardship for this to happen. And since the OP intimates that her MIL filed Ch 13, it's highly unlikely that these loans will be discharged.

 

 

Just so you know, my mother in law called Sallie Mae.....she declared chapter 13 summer 2005....they said your balance is zero and your loan is discharged. By the way.....the loan was a Sallie Mae PLUS loan....student loans that parents take out to pay for their kids college. Is it that these PLUS loans can be discharged, they are not federally insured....or do you think the Chapter 13 in Pennsylvannia just takes care of it?

 

 

 

She cant be discharged....even her BK is not discharged yet if she is still making payments. This makes it obvious that SM doesnt know what they are talking about@

 

PLUS loans are Federally insured loans. Due to the BK stay, more than likely the balance has been zeroed out on SM's computer as they cannot collected on it during the automatic stay. Generally as a safety measure the accounts are put into BK status or locked down, so talking to a SM rep is NOT reliable. It is also possible that the loan itself has been transfered or was defaulted prior to the BK.

 

It never went into default. The PLUS loan is listed along with all the other unsecured creditors on her papers. You would think they would have to notify this woman that the loan is not done. That seems very unfair. Neither the Judge nor bankruptcy attorney has advised that it's not done. Except for $15,000 in other loans, the bulk of it was student loans....otherwise there would have been no reason to file.

 

It is not the job of SM or the courts to advise your MIL on BK laws. This is her attorneys responsible. Sounds like he has screwed her up royally.

[Becca88]

Yes it sure will. I received my paperwork from Sallie Mae today.

 

 

It is EXTREMELY rare. There has to be some very serious undue hardship for this to happen. And since the OP intimates that her MIL filed Ch 13, it's highly unlikely that these loans will be discharged.

 

 

Just so you know, my mother in law called Sallie Mae.....she declared chapter 13 summer 2005....they said your balance is zero and your loan is discharged. By the way.....the loan was a Sallie Mae PLUS loan....student loans that parents take out to pay for their kids college. Is it that these PLUS loans can be discharged, they are not federally insured....or do you think the Chapter 13 in Pennsylvannia just takes care of it?

 

 

 

She cant be discharged....even her BK is not discharged yet if she is still making payments. This makes it obvious that SM doesnt know what they are talking about@

 

PLUS loans are Federally insured loans. Due to the BK stay, more than likely the balance has been zeroed out on SM's computer as they cannot collected on it during the automatic stay. Generally as a safety measure the accounts are put into BK status or locked down, so talking to a SM rep is NOT reliable. It is also possible that the loan itself has been transfered or was defaulted prior to the BK.

 

It never went into default. The PLUS loan is listed along with all the other unsecured creditors on her papers. You would think they would have to notify this woman that the loan is not done. That seems very unfair. Neither the Judge nor bankruptcy attorney has advised that it's not done. Except for $15,000 in other loans, the bulk of it was student loans....otherwise there would have been no reason to file.

 

It is not the job of SM or the courts to advise your MIL on BK laws. This is her attorneys responsible. Sounds like he has screwed her up royally.

 

 

Lynn, part of her payment plan includes the student loans (obviously she would not be paying back the whole amount)....do they reduce their balance for the bankruptcy or do you think they'll come after her for the rest once the bankruptcy is discharged.

[LynnInMN]

The payments she is making now will be applied to her balance. However once the BK is discharged, SM or whoever is holding it at that time will require payments be made. Nothing will be discharged.

[keepmine]

There is a little quirk in the bk laws if you try and include student loans.

You must file an application for an adverserial proceeding to deal with the student loans. Inother words, 2 separate proceedings. A 341 where a trustee handles the majority of the petition and then a hearing before a bk judge on the student loans. If she didn't go down this road, they were not discharged.

[LynnInMN]

There is a little quirk in the bk laws if you try and include student loans.

You must file an application for an adverserial proceeding to deal with the student loans. Inother words, 2 separate proceedings. A 341 where a trustee handles the majority of the petition and then a hearing before a bk judge on the student loans. If she didn't go down this road, they were not discharged.

 

 

From my understanding, it is next to impossible to get a hardship discharge when a 13 is filed under adverserial proceedings and most people filling this type of BK are gainfully employed.

[Polaroy2]

Federally backed student loans are virtually IMPOSSIBLE to get discharged...

 

Most people think that when they file for "undue hardship" that it means they cannot pay for a few years... What it really means is: that individual person CANNOT payback the loan(s) within their lifetime... This usually is due to a life altering event where limbs are lost. That individual must PROVE to the court that they CANNOT be a fully functional person in the workplace...

 

It does NOT pertain to people who cannot find a job for a few years...

 

When you file for BK, ALL creditors must be included in the petition, one cannot pick and choose.. While the BK is in progress, SM or any creditores cannot call to collect as it is a violation of the BK code...

 

Most people think that SL are dischargeable, BUT they are NOT. Recently it was deemed that Social Security can be garnished to collect on SL...

 

My advice would be to talk to the lawyer, and NOT SM, as SM is NOT in a position to give legal advice about BK.

 

One thing that can be counted on is the fact that her SLs' were NOT discharged. They are merely sitting there until the automatic stay is lifted... Than they will come back, and with a vengeance!

[Becca88]

Federally backed student loans are virtually IMPOSSIBLE to get discharged...

 

Most people think that when they file for "undue hardship" that it means they cannot pay for a few years... What it really means is: that individual person CANNOT payback the loan(s) within their lifetime... This usually is due to a life altering event where limbs are lost. That individual must PROVE to the court that they CANNOT be a fully functional person in the workplace...

 

It does NOT pertain to people who cannot find a job for a few years...

 

When you file for BK, ALL creditors must be included in the petition, one cannot pick and choose.. While the BK is in progress, SM or any creditores cannot call to collect as it is a violation of the BK code...

 

Most people think that SL are dischargeable, BUT they are NOT. Recently it was deemed that Social Security can be garnished to collect on SL...

 

My advice would be to talk to the lawyer, and NOT SM, as SM is NOT in a position to give legal advice about BK.

 

One thing that can be counted on is the fact that her SLs' were NOT discharged. They are merely sitting there until the automatic stay is lifted... Than they will come back, and with a vengeance!

The unfortunate part is she would have needed to file Chapter 13 if not for the student loans.....no one told her they will still be there. What a shame/sham.

[LynnInMN]

She needs to talk to her attorney and possibly file a complaint with the bar association. I dont know how many times when I was collecting, BK's were filed with only student loans, or student loans being the bulk of the filing. If the borrower had been advised properly, in most cases they would not have filed. Back pre 1998 law change when you could file on loans, I remember I case in particular that a girl filed on $60k in student loans. Her attorney filed 4 days too soon. Nothing was discharged. By the time she was returned to our agency, the 98 law changed happened. God was she pissed. I suggested she file a complaint with the bar association. She ended up being refunded her BK fee plus $10k in damages. She was still stuck with a BK on her record, for nothing that could be disharged.

[Becca88]

She needs to talk to her attorney and possibly file a complaint with the bar association. I dont know how many times when I was collecting, BK's were filed with only student loans, or student loans being the bulk of the filing. If the borrower had been advised properly, in most cases they would not have filed. Back pre 1998 law change when you could file on loans, I remember I case in particular that a girl filed on $60k in student loans. Her attorney filed 4 days too soon. Nothing was discharged. By the time she was returned to our agency, the 98 law changed happened. God was she pissed. I suggested she file a complaint with the bar association. She ended up being refunded her BK fee plus $10k in damages. She was still stuck with a BK on her record, for nothing that could be disharged.

 

She talked to the attorney yesterday who assures her that she has bankrupted her student loans. Guess we'll see in about 2 years!

[LynnInMN]

She needs to talk to her attorney and possibly file a complaint with the bar association. I dont know how many times when I was collecting, BK's were filed with only student loans, or student loans being the bulk of the filing. If the borrower had been advised properly, in most cases they would not have filed. Back pre 1998 law change when you could file on loans, I remember I case in particular that a girl filed on $60k in student loans. Her attorney filed 4 days too soon. Nothing was discharged. By the time she was returned to our agency, the 98 law changed happened. God was she pissed. I suggested she file a complaint with the bar association. She ended up being refunded her BK fee plus $10k in damages. She was still stuck with a BK on her record, for nothing that could be disharged.

 

She talked to the attorney yesterday who assures her that she has bankrupted her student loans. Guess we'll see in about 2 years!

 

Yes, she did BK her student loans...everyone who files BK that have student loans have to list them. However it all comes down to the actual discharge at the end of her wage earner plan.

 

Ask you MIL if she had a special "adverserial hearing" ...this is normally seperate from the BK 341 hearing. If she just went to court once, it didnt happen. Lets put it this way...if she is working with no extra ordinary expenses that the BK did not take care of, there is no way in hell she would qualify for discharge. Even if she is not working but is capable of working, they wont grant a hardship discharge. The attorney is simply covering his flowers....or his mistakes. Again this is NOT uncommon. Attorneys you dont know the BK laws for student loans get caught up in this mess frequently.

[Becca88]

She needs to talk to her attorney and possibly file a complaint with the bar association. I dont know how many times when I was collecting, BK's were filed with only student loans, or student loans being the bulk of the filing. If the borrower had been advised properly, in most cases they would not have filed. Back pre 1998 law change when you could file on loans, I remember I case in particular that a girl filed on $60k in student loans. Her attorney filed 4 days too soon. Nothing was discharged. By the time she was returned to our agency, the 98 law changed happened. God was she pissed. I suggested she file a complaint with the bar association. She ended up being refunded her BK fee plus $10k in damages. She was still stuck with a BK on her record, for nothing that could be disharged.

 

She talked to the attorney yesterday who assures her that she has bankrupted her student loans. Guess we'll see in about 2 years!

 

Yes, she did BK her student loans...everyone who files BK that have student loans have to list them. However it all comes down to the actual discharge at the end of her wage earner plan.

 

Ask you MIL if she had a special "adverserial hearing" ...this is normally seperate from the BK 341 hearing. If she just went to court once, it didnt happen. Lets put it this way...if she is working with no extra ordinary expenses that the BK did not take care of, there is no way in hell she would qualify for discharge. Even if she is not working but is capable of working, they wont grant a hardship discharge. The attorney is simply covering his flowers....or his mistakes. Again this is NOT uncommon. Attorneys you dont know the BK laws for student loans get caught up in this mess frequently.

 

No, of course she has no hardship reasoning...she not disabled. She didn't go for a special hearing. It's just amazing to me that this attorney can continue to tell her she will owe nothing at the end of her 3 years....and even calling Sallie Mae who said her balance was zero and discharged (I've now found out her loan is with the US Dept of Education, not with Sallie Mae anymore) All we can do is ask and we keep getting the same answer....so all we can do is wait 2 years to see what the REAL answer is. She's asked her attorney to send her a letter reiterating that her loans are done. I've asked a local attorney here and he said to me if you figure out a way to do it let me know, 'cause I've gotten student loans I'd like to get rid of. ha ha. I believe you in that you cannot get them discharged, but it's unfortunate that no one explains this....she's asking and they are saying the bankruptcy discharges it. My saying is DEATH, TAXES and STUDENT LOANS!

[TxQuiltGirl]

Your MIL's monthly payment will add up to only $2700 at the end of three years. What else did she BK?

[LynnInMN]

Sounds like she was in default on thes loans...and for quite a long time! If this was originally a Sallie Mae loan and is now with the DOE it sounds like it has been subrogated.

 

Yup it will hit her hard once the BK is discharged. Tax seizures, wage garnishments....she will argue "but they were discharged"....the attorney is a total salamander!!

[Becca88]

Your MIL's monthly payment will add up to only $2700 at the end of three years. What else did she BK?

$15,000 in credit card bills...$25,000 in student loans....$40,000 total......then at the end of the 3 years she can payout the balance of her bankruptcy or take to the end of the 5th year, which will make her total payback near $9900, with her payments she's been making.

[Becca88]

Your MIL's monthly payment will add up to only $2700 at the end of three years. What else did she BK?

$15,000 in credit card bills...$25,000 in student loans....$40,000 total......then at the end of the 3 years she can payout the balance of her bankruptcy or take to the end of the 5th year, which will make her total payback near $9900, with her payments she's been making.