Legal Question in Bankruptcy in Indiana

What are my options now?

I consulted a bankruptcy attorney in 2001 to file bankruptcy. I had student loans; I mentioned to the attorney that I didn't think they could be included, but he said we would list them anyway. I went before a bankruptcy judge later in 2001 and my case was settled, or so I thought. Because I had a $2000 tax refund, my refund was divided up between my unsecured debtors, which included the education funding service that had my student loans. I realize that in the interim the student loans were sold to different loan companies. Now, two years later, I am getting harassing phone calls at work from the loan company that finally ended up with the student loans. I spoke to the attorney who represented me and he told me that additional paperwork should have been filed to include student loans; that most student loans included in a bankruptcy were usually offered a settlement to satisfy the debt, which is what I thought happened the day I went before the bankrptcy judge. How do I get these harassing phone calls to stop? And what course of action can I take now? I have an appointment with the original attorney to find out a course of action, but given the fact that he ''dropped the ball'' the first time, I am leery.


Asked on 3/17/04, 9:34 am

1 Answer from Attorneys
Eric Southward Southward & Haggard

Re: What are my options now?

What unfortunately you have taken conflicting advice and assumed a few things wrongly. First off, when you file bankruptcy, you list EVERYONE you owe, whether you plan to get rid of the debts, keep them (like a car and house) or they won't go away (generally, like child support, taxes and student loans).

Generally, whether you list student loans or not, most of the time they DON'T go away. They only way to make student loans is to file an adveresary action against them (most bankruptcy attorney's do not do this as part of your original bankruptcy fees as it is a separate trial). Then you have to win. You have to prove that even though you owe the student loans and that they normally don't go away that it would be a hardship for you to have to pay them. This is where 99% of the bankruptcy population loses. We joke that if you have one arm and one leg, then you can afford to pay your student loans, even if it is only $10 per mopnth. The point is, is that it is nearly impossible to make student loan go away in bankruptcy. So no, it is not a matter of filing simple paperwork and no, most student loan companies do not negotiate or offer to settle your debts to them. And finally, you never went in front of a judge; you were in front of a trustee and that person has minimal control over what goes away in your bankruptcy or not. The rules constructing what debts are dischargeable or not are under Section 523(a) and there are 18 of them. The bottom line is that your attorney should have told you that your student loans still needed to be paid. And that if you think you cannot pay your student loans (due to a disability, etc) then you should file and adversary against them. But keep in mind that most people don't win, that's why most attorneys don't file any actions because you just won't win. I wouldn't say anyone dropped the ball; quite the contrary. The problem has to do with miscommunication. I would suggest that you either get a book on bankruptcy or go online and read about chapter 7 because there is a lot of confusion there.

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Answered on 3/17/04, 11:09 am


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