Legal Question in Bankruptcy in California

Re: Student Loan

Probably not. It depends on how long the loan was in repayment, and I believe back then the requirement was 5 years, but I really don't have a copy of the 1986 bankruptcy code handy at the moment.

Re: Student Loan

Thanks for your post regarding student loans in bankruptcy. As someone else has mentioned, there were changes to the Bankruptcy Code in late 1998 that made student loans non dischargeable, regardless of the age of the loan, unless the borrower can establish substantial hardship.

Student loans are no longer dischargeable in bankruptcy just because they have been in pay status for the requisite time. The only way the loan can be modified or discharged is by proving that repayment of the loan will create an undue hardship on the debtor/borrower and his family.

This standard is generally interpreted to mean that the debtor cannot maintain a minimally adequate standard of living and repay the loan. It usually requires a showing that the conditions that make repayment a hardship are unlikely to improve substantially over time. Many courts use the test for undue hardship found in the Brunner case.

To discharge a student loan in bankruptcy, you must first bring an adversary proceeding in the bankruptcy case. The debtor must prove at trial that repayment constitutes undue hardship.

You may want to look at your paperwork from the bankruptcy, specifically the "closing of case" document entered.

Or, if you like, I can research your case, and the applicable law in 1986, for a fee.

Thanks, and feel free to email or call at 1-877-568-2977.