Legal Question in Bankruptcy in Minnesota

I am married, recently with one child. I have a privately held $80k school loan that I took out to go to flight school right before 9/11, that is a $700 monthly payment.Been working in construction trades since not being able to find a job as a pilot (since 2003) own a home that recently refied to lower the payment, but even the refi is probably $20k over what I could get for the house. Consolidated $35k of consumber and cc debt last year into a 5 year auto loan on my truck.

And trying to pay for day care. I've gone through over $10k in savings over the last two years trying to keep up with all these things, and having the new baby's medical bills on top of it all it's getting difficult to manage. I've been on time with everything and have wonderful credit, but I'm now just out of money. Is there a chance that I can just erase my school loan with bankruptcy? If I could lose that, I may manage to keep up with everything else. Does it matter that the school was private as well and it was the only loan company they worked with?


Asked on 1/02/10, 9:48 pm

1 Answer from Attorneys
David Kelly-952-544-6356 Kelly Law Office

Well, from the few facts of your life you disclose in your question, it sounds as if you are not confined to a wheel chair or permanently confined to a mental institution. There is such a thing as a hardship discharge of a student loan, but hardship in that context seems to be defined as being nearly dead. And under the 2005 legislation, there is no longer a distinction between private student loans and government student loans. Used to be that the private ones could be discharged more easily, but no more.

You might be able to get some temporary relief by filing a Chapter 13. This process has its benefits but also some serious problems. You would probably be able to get a lower monthly payment through the Chapter 13 process, and the payment plan could be for as long as five years. However, while that goes on the interest continues to accrue on the loan, and at the end of the five years the whole thing bites you in the ass - because you will owe more than you did to begin with.

I suggest you consult with a bankruptcy lawyer face to face.

This response to your question is for general information purposes only, is not legal advice, and does not create an attorney-client relationship.

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Answered on 1/08/10, 7:20 am


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