05 Oct How Do I Qualify for a Hardship Discharge of my Student Loan?
Not surprisingly, bankruptcy issues touch on other areas of the law. I publish a Social Security disability blog and I recently received a question from one of my blog visitors that relates to an important bankruptcy issue:
i am a 61 year old woman suffering from osterarthritis,degenerative disk disease ,asthma, fibramyalga and post stroke. I have been disabled since 1985 and have been receiving ssdi ever since. 3 or 4 years ago I decided to go back to school and get a degree in information technology and work through computer to make money. I went to the University of Phoenix online and got more than half way through to receive my bachelors and had a stroke. I was no longer able to continue school and had no way to pay back my student loan. I get $743 a month to live pff and have a section 8 for housing supplement. Someone representing the bank E Fund i guess that gave me the loan to garnishere my check . Can they do this? Please tell me how or what i need to do. Thanks. Ramona.
Here is my response: this would appear to be a case where you might be eligible for what is known as a “hardship discharge” of your student loans. Generally, student loans cannot be eliminated or “discharged” in a bankruptcy. However, Bankruptcy Code Section 523(a)(8) does provide that a student loan can be discharged if paying the loan would “impose an undue hardship” upon the debtor.
In the Northern District of Georgia, where I practice, the judges have been very reluctant to permit hardship discharges except in the case of a medical reason for the hardship discharge request. The opinions I have looked at focus on the reason for the request and the likelihood that the debtor will obtain future employment that might allow for payment of the student loan. In Ramona’s case I think she would have an argument for a hardship discharge. It appears that she has been acting in good faith, that the reason she can’t pay the student loan is medically related and her likelihood of significant future employment is slim.
The hardship discharge of a student loan is not always an “all or nothing” proposition. I have seen some cases where a judge will declare a portion of a student loan dischargeable but leave a portion non-dischargeable.
Cases involving hardship discharge of student loans have been considered in every bankruptcy filing district. If you think that your case may qualify, you should arrange to meet an experienced consumer bankruptcy lawyer who can offer guidance.
Jonathan Ginsberg, Esq.
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