Legal Question in Bankruptcy in Minnesota

Student loan bankruptcy

I started college in 1991 and took out about $16000.00 in loans over three years. I dropped out of school and did not make payments. Over the years I would get notices and the amount was increasing Expodentionaletly . Three years ago I tried to start making payments, they said if I made 6 months of $250.00 a month, they would reconsolidate my loan. I made the 6 months of payments and they reconsolidated my loans, now they want $450.00 a month and I owe $49000.00. I stoped making payment 2.5 years ago. I'm married and have a son now and would like to start over or at least have some reliefe. Is there any thing I can do? I am the only income in our family and I make $35000.00 a year and I cant aford $900 a month rent $250.00 a month car, $100 a month insurance, $400 a month food and utilities and still make $400. to $500. amonth loan payments.


Asked on 8/15/01, 11:36 pm

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

Re: Student loan bankruptcy

The general rule is that student loans cannot be discharged in a Chapter 7 bankruptcy. For most folks the best bet is to either see on your own what kind of payment plan you can work out, or file a Chapter 13 bankrutpcy. The Chapter 13 is a process where you propose a payment plan to the creditors which if approved by the court the creditors must accept.

It is possible in Chapter 7 in some extreme cases to get a discharge of a student loan. There is a hardship exception to the rule that they can't be discharged. The current state of the case law as I understand it is that you better be able to show that there is no way under your circumstances that you could ever realistically in your life time pay this loan. I don't want to give you too much encouragement, but your's could be such a case.

You really need to consult a lawyer competent in this area. Good luck.

This response is for general information purposes only and does not create an attorney-client relationship. You are advised to consult an attorney of your choice concerning the details of your case.

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Answered on 8/17/01, 6:31 pm


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