(download these FAQs as a PDF document)
Yes. Regardless of how many people or websites tell you that it is impossible or
virtually impossible to bankrupt your student loans, you can do it.
Yes. Many people have been successful at bankrupting their student loans with the help of Bankrupt Your Student Loans and Other Discharge Strategies. We find that people who represent themselves seem to be more successful than those who hire an attorney. We think this is due to the courts recognizing that a person in this situation is in dire financial stress and could not possibly afford an attorney who wants to charge $10,000 or more for these kinds of cases. Also, the debtor is much more familiar with his/her case and can make a stronger passionate plea.
In 1998, Congress changed the bankruptcy laws such that student loans could no longer be automatically discharged through bankruptcy. Instead, the debtor must file an adversary proceeding in conjunction with the bankruptcy. During the proceeding, the courts determine whether or not repaying the student loans create an “undue hardship” for the debtor. If the court agrees, then the student loan debt are discharged as part of the bankruptcy.
Actually, no. The steps are easy and the book— Bankrupt Your Student Loans and Other Discharge Strategies— provides all the forms and examples. What is difficult is the emotional struggle representing yourself against attorneys who fight against you. The book takes you through the entire process step-by-step. The website — www.BankruptYourStudentLoans.com — has videos to help
overcome the emotional struggle.
Why there are so few people who have won these cases is because so few people have tried. There has been a significant up-tick in the number of adversary proceedings that have been filed since the advent of this book. More and more people are winning their cases— and without the use of an attorney. The State Department, Department of Education, and attorneys keep repeating the mantra that it is nearly impossible. That does not make it true. Think of it this way. If you don’t take the effort to file an adversary proceeding, you will be stuck with your student loans probably for the rest of your life. A small debt of $22,000 (which is the amount of student loans the average college student leaves college owing) can easily grow to $100,000 or more in a few short years. You will never be able to buy a house or participate in the American Dream. What have you got to lose but a mountain of debt?
Approximately 1.5 million people file for bankruptcy each year. About half of them have student loans. That means almost 700,000 people each year should be filing an adversary proceeding. Yet, until the book was released only about 200 proceedings were filed each year. That means virtually everyone who has gone through a bankruptcy since 1998 still owe on his or her student loans.
R.W. had his entire student loan debt of $225,00 discharged by the court in 2009. He took the example forms from the book, whited-out some of the pertinent sections, hand printed in his information, and filed the adversary proceeding. All subsequent documents were hand-printed. Obviously, typed forms or correspondence are not required. In his jurisdiction, instead of going to mediation he was given interrogatories to complete. The Department of Education held fast and went all the way to trial. There, he read an impassioned plea to the court. Later the court sided with him and bankrupted his entire student loan debt. Congratulations R.W.!!!
It seems to take about eight months to a year for the adversary proceeding to
complete. The adversary proceeding must be filed within 30 or 60 days of the
meeting of the creditors.
No. If you do not win the adversary proceeding, no additional fees or costs stemming from the proceeding can be assigned to you. Of course, if you hire an attorney or paralegal to help, you will be obligated to pay them what ever you agreed to pay for their services.
Zero dollars. There are no court costs to the plaintiff for filing an adversary
proceeding related to student loans.
Recently, a number of people have successfully reopened their bankruptcies for
the purpose of filing an adversary proceeding. These cases are at the initial stage
and it is unknown if this strategy will ultimately prove effective.
Yes. The book uses Chapter 7 forms for illustrative purposes only. The
adversary proceeding is related to bankruptcy in general and can be used in
conjunction with a Chapter 11, 12, or 13.
It is estimated that 700,000 debtors a year should file the adversary proceeding. There are also another 5 million or so people who have completed a bankruptcy who should consider reopening their bankruptcy for the purpose of filing an adversary proceeding. If even 1% of these people were to file the adversary proceeding, it is thought the entire system would crash. The State Department does not have enough attorneys to handle that many cases. The author of the book encourages everyone to file an adversary proceeding. The crash would bring this horrible state of affairs to the attention of Congress. Hopefully they would return student loans to the status they held before the 1998 bankruptcy reform as unsecured debt that would be discharged automatically through the standard bankruptcy process.
There are two virtually unknown programs called Compromise and Write-Off that allow the Department of Education to discharge student loans. Details of these programs are discussed in the book. Also, there are many repayment or discharge options provided by the DOE. Perhaps one of these would be better suited to your situation. Again, the book details many of these different programs.
It is not known if such suits are pending. The author hopes a concerted effort can
be made to challenge the legitimacy of the 11 U.S.C.A. Bankruptcy Reform Act
(1998) §523(a)(8). Many different strategies are discussed in the book. Perhaps
some attorney reading this post will take up the challenge.
Yes. Don’t hesitate to file the adversary proceeding. You can do it and without
an attorney. You have nothing to lose but a mountain of debt.