Legal Question in Bankruptcy in Maryland

Re: Bankruptcy

Federal or federally-guaranteed Student loans are dischargeable in bankruptcy - any chapter - only upon proof of undue hardship, which is a high standard. If, for example, you suffer from a disability that precludes you from working and taking advantage of the education, and you are destitute as a result, the loan may be dischargeable. General inability to pay is not enough.

While student loans are not dischargeable, the automatic stay does stop collection efforts during the bankruptcy case. So in a Chapter 13, you can pay the loan through your plan. However, if you do not pay in full, you will still owe the rest after the case is over. Even if you do pay in full, you may owe some interest after the case is over. And depending on the circumstances, you may have to pay all unsecured creditors in full in order to be able to pay the student loan in full. To avoid that result, it may also be possible to do a "Chapter 20": a Chap. 7 to discharge the other general unsecured debt, immediately followed by a Chap. 13 to resolve the student loan debt.

See an experienced bankruptcy lawyer. Do not try to do this yourself.

Re: Bankruptcy

Are you in a 7 or 13? When was the last time you paid on it? Regardless of whether someone tells you yes or no, I'd say list it and try to discharge it. Sounds like the loan is "stale". It is still an unsecured debt. You may wish to consult with competent legal counsel on this as well. When in doubt "don't keep it out". Let us know if we can be of further assistance. Good luck. Joe Trevino.

Re: Bankruptcy

Generally, student loans are not dischargeable. Since the loan

is a 1989 vintage, the terms of its guarantee should be reviewed.

Whether it will be subject to the bankruptcy proceeding may depend

on whether you file a Chapter 7 or Chapter 13. There may be a possibility

to negotiate a compromise debt. But be warned, the Federal law over

school loans (I presume your loan is of this type) is quite protective. Typically

the only way to get out of paying back a school loan is to die with no funds.

I advise that you contact an attorney to handle your bankruptcy filing and administration.

G. Joseph Holthaus III

(410) 799-9002