That student loans couldn't be discharged in BK. I read in the Credit Forum, where a poster says that they are dischargeable after 10 years. What's the truth?

Student loans backed by the government or by a non-profit organization are not dischargeable in BK except in EXTREMELY limited circumstances. They can be discharged if you can prove EXTREME financial hardship -- as in, that you will likely never be able to make payments on them. That's not necessarily even that you will ever be able to pay them back entirely -- under the income contingent plan, that isn't even required. Even most (not all, but most) private SLs are backed by a non-profit arm of a for-profit company, so just because they are not government loans doesn't mean that they're dischargeable.

SLs used to be dischargeable and I think that was the old rule -- that they were eligible after 10 years. I think that was changed in the early/mid-90s (it was at least before 1995 when I took mine out because they kept telling us that they were no longer dischargeable).

Probably not the answer you were looking for, but I hope it helps! Good luck!

Actually in the 80's it was 5 years from the time the loan became due and eventually changed to 7 years. That was abolished in October of 1998.

In the US student loans are not dischargeable at ANY time unless there are "undue hardship" conditions beyond the normal hardships that most people file bankruptcy under.

The law was changed in Oct of 1998. There are cases where the loans have been discharged and partially discharged.

I defaulted on a $250 Perkins loan that was taken out in 1971--yes, 1971! I filed a Chapter 13 in 1986 or 1987 and THOUGHT it would be included since it was listed on the creditor paperwork. I just checked the NSLDS site because I want to return to school (after a million years!). Anyway, it shows that I owe $250 on a Federal Perkins loan and shows no interest--just the original $250.

The site also shows under "disbursement amount" $250 and under Loan Status "DW" for 12/7/1999 and under Description it says "defaulted write-off". In another entry under description for 6/15/1987 it shows "defaulted then bankrupt, active, chapter 13" and no entries after that.

Does this mean that I still owe the $250 but that, after paying it off, I will be eligible for financial aid to return to school now?

Thanks for any insight into this.

Jess

Chapter 13's often do not include payments in the schedule for the student loans. However unlike old chapter 7's that did discharge eligible student loans on discharge, chapter 13's did not. It became due again at the discharge of the 13 with nothing written off. Interest is stayed during the 13 repayment period.

Thanks Lynn--so my $250 loan has been accruing interest since the Chapter 13? I must owe a ton of money by now!! Guess I'll start making some calls today!

Jess

I called the Natl Payment Center in Greenville TX this morning and it looks like I owe $525.56 if I pay in full by October 2005. I was given the option of send payments of whatever amount I want as long as it's paid off by that time.

Not bad for a 30-year old default on a $250 loan. I plan to go ahead and send this in so I can get started working on the degree I should have had long ago! Thanks for all the info from this board.

Jess