Some Private Student Loans Are Dischargeable in Bankruptcy
Most of us have heard that “student loans are not forgivable in bankruptcy.” While this might often be the case, it is not always the case. Some private student loans can be treated just like other types of unsecured consumer debt during a chapter 13 bankruptcy or a chapter 7 bankruptcy.
Here at Smith Law Group we specialize in these types of private student loan bankruptcy cases. There are three basic scenarios that could help you determine if your loan might be dischargeable in bankruptcy (and many more factors in other cases).
You didn’t attend a Title IV school.
Private student loans must be used to attend a Title IV-certified school (schools with federally approved accreditation) to be considered non-dischargeable educational loans within bankruptcy. If you were not eligible to borrow federal loans to attend your school, then your school was not Title IV-certified and your student loans may be dischargeable.
You borrowed in excess of the school’s cost of attendance.
The most you should be able to borrow for qualified student loan purposes is the school’s cost of attendance. This is determined by the school – for things such as tuition, fees, room, board and educational supplies - minus other financial aid that you may have received, such as grants and scholarships. If you were permitted to borrow more than these pre-determined expenses, you may be eligible for student loan debt relief.
You were not an eligible student.
Qualified educational loans can only be issued to eligible students. If you borrowed money but didn’t have at least a half-time schedule or you were not a U.S. citizen, the loan might not have been a qualified educational loan and student debt litigation should be explored.
If you fall into one of these categories, you may be able to get private student loans discharged through your chapter 7 or chapter 13 bankruptcy. If you’ve already gone through bankruptcy and you fall into one of these categories, Smith Law Group is happy to explore student debt litigation to remedy what should have already been discharged.
Keep in mind that this area of law is still relatively new, so some bankruptcy attorneys may not be familiar with how to handle your private student loans. Tell your bankruptcy attorney to contact Smith Law Group today to explore ways in which we can assist with discharging your student loan debt.