Tustin, CA asked in Bankruptcy for California

Q: In California discharged ch7 including all student loans. Student loan collections still coming after me. What can I do?

The Judge signed and discharged all debt including student loans. I am then told student loans won’t discharge. The Judge signed off on ALL debt listed no exceptions so why are they not handled that way by collection agencies? I need a lawyer to help me.

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3 Lawyer Answers
Leon Bayer
Leon Bayer
Answered
  • Bankruptcy Lawyer
  • Long Beach, CA
  • Licensed in California

A: The short answer is that you can not automatically discharge your old student loan*. However, you may discharge it, if you successfully sue the lender in bk court on the grounds of "undue hardship."

I recommend that you do some simple research yourself on the subject of a bankruptcy "undue hardship" discharge of student loans, and see if you think you have a case.

If you think so, submit a new question with the details of why you think you might be able to qualify for the "undue hardship" discharge, and then you can get the input of various bankruptcy lawyers on this site.

You will probably find that the requirement of "undue hardship" sets a much more difficult standard than what it sounds like it would be.

Almost everyone with a student loan payment probably feels like it is an "undue hardship" on them, but that is not what that term means in the bankruptcy law.

Most bankruptcy court decisions that have granted the "undue hardship" discharge have awarded it to individuals with a serious permanent physical or mental disability that prevents the person from having any standard of living better than what would be viewed as a basic subsistence level, (such as barely able to afford below average rent, drive a very old car, no luxury expenses, etc.

*The only other exception I can think of might be if your loan falls into a category of loans that are not a "qualified education loan", as defined in section 221(d)(1) of the Internal Revenue Code of 1986, see https://www.law.cornell.edu/uscode/text/26/221, (which means higher education expenses that are "post-secondary" schools like colleges. Therefore, if your loan was for a school that teaches a non academic curriculum, the student loan might be eligible for an automatic discharge. I can't think of what that might be, but anyway, that's what the statute calls it.

Theodore Allan Greene
Theodore Allan Greene
Answered
  • Bankruptcy Lawyer
  • Sacramento, CA
  • Licensed in California

A: Mr. Bayer gave you a great answer. Most importantly you should check with your bankruptcy attorney and if you didn't have one it's probably just a misunderstanding. Student loans are not automatically discharged like most other debt.

Harlene Miller
Harlene Miller
Answered
  • Bankruptcy Lawyer
  • Irvine, CA
  • Licensed in California

A: I agree with my colleagues as to your situation. Also, you should review the Order of Discharge that you received from the Court. The language on page 2 of the Order specifically identifies "some debts are not discharged" and provides a list of examples which includes "debts for most student loans." Discharging student loans requires a lawsuit called an "adversary proceeding" be filed in your bankruptcy case to try to have the loans discharged based on hardship. As stated, discharging student loans is not automatic and requires further action.

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