I met with an atty the other day in regards to possibly filing for BK. I went in to find out about having my CC debt discharged even though the majority of my debt is from student loans. He said it may be possible to get some of the student loans discharged. Not the FFELP loans but those that I got through the school and that are listed as private since they came from a private lender not the Gov. I first need to dig up the promissory notes before he can make a determination of whether there is even a chance at having these loans discharged in BK.

My question is whether anyone has had their private student loans discharged in a BK or attempted this and why did the case succeed or get rejected? I feel my atty is being straightforward and I will get an answer from him as soon as I get the promissory notes to him which will take about a week or so as they are being sent to me. I am thinking I may not file if that portion of the debt cannot be discharged since the CC debt is relatively minor but CC bills are due soon and he advised me not to pay anything more on the debt if I am going to file. Access Group was who I went through to obtain the loans but it was not the lender if that matters.

What i am thinking is if its a private loan that you used for school then it might be able to get discharged. If its a private school loan then i dont think you will be able to get it discharged.

To try to explain the difference between both, the private loan would be like a personal loan that you just got and never said what it will be used for. The private school loan is coming from a lender that knows you will be using it for school and usually pays the school and not you...

The checks came to the school and then the school gave them to me to use as I needed.

Something smells fishy about the lawyers advice, the government doesn’t make student loans, the government guarantees them so in a sense every student loan is a "private" loan

I'd have to agree, the lawyer's advice doesn't sound right - but then, he may not know all the facts either.

The 3 'measures' to get a student loan discharged are:
- NOT federally backed
- NOT primarily for educational benefit (thats the tough one !)
- Undue hardship - nearly impossible to prove in you're healthy and employable.

Since your loan, regardless of where it came from, WAS for educational benefit, I'd be real skeptical that it would be discharged.

I recently filied BK and i have 2 student loans. One from Citibank and the other from Sallie Mae. The Sallie Mae is a private student loan and i was NOT able to discharge it in my BK.

As the others said i think your lawyer is giving you the wrong information because its nearly impossible to discharge your student loans.

I suggest you go talk to other lawyers and see what they say, they might be more knowledgeable then this one..

Just to provide a little more clarity here:

He did say this was only a possibility and that he would need to see the promissory notes before making determination of whether to proceed. I assume he will be able to determine whether the loans are federally backed or not by these documents. Just trying to get a sense of what they were he asked if a credit check was run before the loans were granted. I checked into the federal backing a little and it does not appear the "private" loans are federally backed.

He also mentioned it would be necessary to prove the not for ed. benefit issue. Essentially this portion of the money went to living expenses.

Undue hardship he did not mention. But he also said he did not want to discuss this until he has the promissory notes and that he would not proceed unless he felt confident about succeeding. He mentioned this would require a separate proceeding, after filing, for an adversary proceeding.

Right now it's looking extremely rare for anyone to have their private loans discharged and I am losing hope over this. I'm so drained over all of this debt.

GSLs are regulated by the Gov't so the interest rate is 8% the first year then 10% thereafter. Private student loans can have any interest rate because they aren't backed and controlled by the Gov't. Short term loans issued by the school typically are not dischargeable either, but you have to check your state laws if it is a state school.

You can discharge GSLs. My sister did. You just need to prove a hardship. If you want to know the standards that define "hardship" there's an appeals court case in the 6th USDCA where a married couple (college grads) from TN both had their student loans discharged. It appears to be largely based on your income to living expense ratio.

Most BK attorneys will tell you no you can't because they charge a flat fee ($450 is the going rate here w/o mortgage and $750 with mortgage). They want to dump your info onto a boiler-plate, print it, file it, show up at the hearing and be done with it. Discharging a GSL requires more work.

your talking out of the side of your mouth, guaranteed student loans are not dischargeable and it has nothing to do with lazy lawyers. True hardship is the only way to get relief

That's what I said. They are dischargeable if you can prove a hardship. The vast overwhelming majority of BK attorneys will flat out tell you no and leave it that without even mentioning the hardship clause. Apparently they can tell by looking at someone what the situation is. My sister asked over 2 dozen attorneys in VA, MT and NY before one finally discussed the hardship clause and that was only because she brought it up after I told her about the appeals court ruling.

That may very well be because these judges misinterpreted the standard for “hardship”? My understanding was unless your disabled or have dependents that are disabled or some other kind of extreme "hardship", discharge was close to impossible? If that's not accurate it would be an interesting development. If you can please post what these two cases used for a definition of "hardship", that would be a big help, thanks.

Also if the student loan was funded in whole or part by a not for profit institute it also isn't eligible to be discharged in bankruptcy. That's how alot of the private companies get around having it be allowed to be discharged in bankruptcy. You'd have to read the fine print on the loan papers. I just settled a student loan with Wells Fargo for 43% of the original balance. It wasn't easy but they finally accepted it. Good luck!!