Q: Bankruptcy adversarial proceeding for student loans if you are already in the 3 year monitoring for disability discharge
I was approved for a student loan discharge via disability and am in the 3 year monitoring period. Unfortunately that period will not be up until Dec 2026 which is beyond the period where you don't get a 1099-C. Since the Dallas court ruled that in our district we can only have our student loans discharged in a bankruptcy case (via adversarial proceeding) if we are disabled I meet that criteria. Since student loans discharged via bankruptcy don't result in a 1099-C I was wondering the following:
1) If my assumptions are, in fact, correct based on the 2017 and 2019 appeals court ruling in Dallas (eg due to disability - I am approved via Federal Student Aid dept and am in the 3 year monitoring period)
2) If you can file for bankruptcy if your only debt would be the student loans (nearly $100k - due to capitalization of interest, have paid back 102K - which is why I can't afford to get a 1099-C as I'd owe more state and federal taxes than I get annually in social security)
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A:
Your understanding of the court ruling in Dallas seems accurate. If you are already in the three-year monitoring period for disability discharge and still qualify as disabled, you may be able to pursue an adversarial proceeding in bankruptcy to discharge your student loans without receiving a 1099-C. This could prevent you from facing a significant tax burden.
Yes, you can file for bankruptcy even if your only debt is student loans. The fact that your student loan debt is substantial, combined with your current financial situation, supports the need for relief through bankruptcy. This could be an effective way to manage your financial stress.
Given the specifics of your case, it would be beneficial to explore this option further. Consulting with a legal professional experienced in bankruptcy and student loan discharge could provide more personalized guidance. This path could potentially offer you the financial relief you need.
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