Private Student Loan Bankruptcy Discharge

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Robert Murphy Might Save Us All

(Updated October, 2015)

This just in – student loan debt may about to become far easier to discharge via bankruptcy proceedings, and it’ll all be due to a 65 year old man named Robert Murphy.

To pay for college for three of his kids, Robert Murphy borrowed several Parent PLUS student loans (Federal Student Loans) between 2001 and 2007, racking up $246,500 in debt after interest accrual.

When he lost his job in 2002 and found himself unable to get a new assignment, Robert knew he was in big trouble.

After running through all his retirement savings and having his home foreclosed on, Robert and his wife have been left living on $15,000 in annual income from her Teacher’s Aide salary.

It’s a sad story, but there’s a silver lining, because Robert Murphy appears poised to win an appeals case in a Boston federal court who could rule in his favor and expunge every cent of the debt he’s racked up.

Why Does Robert Murphy Matter?

Robert Murphy’s case is important because it could set a new precedent that all courts in the United States will need to follow.

This case hinges on the specific definition of “undue hardship” (the clause people use to get their student loans discharged in bankruptcy proceedings – read below for details), and it’s the first time in a decade that a Federal court will weigh in on the matter.

The outcome of this case will be vital to all of us struggling to pay down excessive student loans, including everyone with BOTH Federal AND Private student loan debt, and especially for those people who have racked up extraordinary levels of debt which they could never possibly pay off.

A win for Robert Murphy will be a win for ALL of us, so keep your fingers crossed and make sure to check back in with me regularly, because I’ll be updating this post as soon as the verdict is released.

What’s New for 2015?

Not much has changed when it comes to private student loan bankruptcy law in 2015, at least legally.

It remains quite difficult to receive an approval to discharge private student loan debt, unless you’re facing an extremely obvious major financial hardship, but I have begun hearing whispers that some more formal relief (legal changes) may be on the horizon.

In addition, stories continue to emerge in the media proving that courts and judges across the country may be getting more lenient and allowing for more private student loan debt discharges than they had in the past, which is a great thing for those of you facing major financial trouble because of excessive debt.

I’ll continue to update this page throughout 2015 whenever any bankruptcy-related news emerges, and make sure to keep you updated as to everything that’s going on.

I’ve Got Good News!

(Updated September, 2014)

I’ve got great news for those of you interested in seeking a private student loan discharge via filing for bankruptcy:

The Eighth Circuit Court of Appeals recently affirmed a decision make by its Bankruptcy Appellate Panel that opened the way for a borrower to receive discharges on 15 different private student loans and a combined total balance of over $118,000!

This is a landmark case that cuts against the grain of the logic typically used to determine whether or not bankruptcy should provide some relief from private student loan debt, and a case that could pave the way for you to get your loans forgiven by filing for bankruptcy.

For details on the case, please view our write-up at the bottom of this page, or click here.

Private Student Loans & Bankruptcy Law

The relationship between private student loans and bankruptcy has been muddled ever since the war on student loan debt began way back in the 70’s, but even in 2014, it’s still possible to get rid of private student loan debt by filing for bankruptcy.

This page will teach you how to figure out if you’re likely to get approval for having your private student loan debt discharged, which type of bankruptcy you should file (Chapter 7 vs. Chapter 13), and what you can expect to face during the legal proceedings.

Can You File Bankruptcy on Private Student Loans?

Yes, you absolutely can.

It’s a bit complicated, but not so difficult that you can’t figure it out with a little bit of research.

Many people think that filing bankruptcy on private student loans is no longer possible, but that’s simply not the case.

In 2014, you can absolutely file bankruptcy over private student loan debt, but better yet, you can get that debt entirely erased by having it “discharged”.

Winning a private student loan discharge does require going to court, and it will likely require the services of a lawyer, but it’s certainly possible to fight, and win, especially if you’re well prepared.

How Does Private Student Loan Bankruptcy Work?

During the bankruptcy process, you’ll need to issue a formal complaint arguing that your student loan debt is placing an “undue hardship” on your life, preventing you from being able to provide basic life needs for yourself and/or your dependents.

It’s tough to receive an undue hardship discharge for certain types of private students loans, but it’s exceptionally easy for others!

The difficulty is determined by the type of school you attended, the specific school where you received your education, and the type of educational program you borrowed money to attend.

Here are the types of private student loans that are typically easy to discharge via filing for bankruptcy:

  • Private student loans to attend a school that is not on the Department of Education’s list of “eligible educational institutions” (explained below in the section called “Am I Likely to Receive Approval for Discharge?”)
  • Private student loans that were provided by large, national lenders, like well-known banks or other massive financial institutions
  • Private student loans that were issued for education that isn’t offered at traditional four year colleges and universities, such as technical training programs, vocational training programs, truck driving schools, IT training courses, coaching classes, mechanic schools, cooking schools and beauty schools

Keep in mind too that even if you don’t qualify for a full discharge, you may end up being eligible for having some percentage of your private student loan debt erased during bankruptcy proceedings.

The relationship between bankruptcy and private student loans is definitely complicated, but this article should help you figure out just how to take advantage of the available opportunities.

Discharging Private Student Loan Debt Via Bankruptcy

Getting your private student loans discharged during bankruptcy proceedings doesn’t happen automatically, as it’s not part of the basic bankruptcy process.

To receive a discharge for your debt, you’ll need to file a petition (called an “adversary proceeding”) that requests a court judgment (called a “determination”) on whether or not you will receive approval for having your private student loan debt discharged.

After filing the petition, you’ll have to prove to the court that paying off your loan “will impose an undue hardship on your and your dependents.

The basic idea here is that the court has to agree that your loans are destroying your life by making it impossible for you to provide food, shelter and other basic needs for yourself and/or your family.

This isn’t an easy to thing to do, even if your loans really are causing you serious financial hardship, especially because different courts use different “tests” to determine whether or not you’re truly facing an “undue hardship”.

Which Undue Hardship Test Will You Face?

We can’t answer that question with any shred of accuracy, and to get an accurate answer, we’d recommend that you consult with a local bankruptcy attorney.

Courts in different parts of the country use different tests, but it appears to be up to the judge’s discretion (at least in some cases) on how this stuff is handled.

And to add to the confusion, some courts take the test as an all or nothing deal where you either qualify for having your entire loan discharged or fail to qualify for having any of it discharged, while others will allow you to discharge some portion of your loan depending on the results of the test.

However, to help give you an idea of what you’ll be facing when trying to get approval for an undue hardship discharge, here’s a breakdown of the most common undue hardship tests in use today:

The Brunner Test

The Brunner test for undue hardship allows you to discharge student loans in bankruptcy proceedings if, and only if, you meet all three of the following conditions:

  • Poverty – If you are forced to repay your private student loans, your current income and expenses will not allow you to maintain a minimal standard of living for yourself and your dependents
  • Persistence – Your current financial situation (really, the problems relating to it) is likely to remain consistent for a significant part of the remaining repayment schedule
  • Good Faith – You have previously made a good faith effort to repay your private student loans by making spending changes

How do you satisfy these conditions?

You’re having trouble paying rent, keeping the lights on and putting food on the table, but you haven’t been taking annual family vacations, you aren’t driving new vehicles, you didn’t recently buy a house, your apartment isn’t furnished with high-quality electronics and you don’t have the latest iPhone in your pocket.

You actually need to live, and look like someone who is living at, near or below the poverty line. If you can’t afford to pay off your private student loans because you blew all the money for them on personal possessions, luxury expenses, or comic books, then you won’t be able to get the debt discharged in bankruptcy when the court applies the Brunner test.

The Johnson Test

The Johnson Test for undue hardship is pretty similar to the Brunner test in that it tries to assess whether or not your private student loan debt will destroy your ability to maintain a minimal standard of living, but it’s more comprehensive than the Brunner test.

This test evaluations the following factors:

  • Employment & Income – This test will evluation your current employment and income, along with your future prospects, comparing them to the Federal poverty line to determine where you fall on the spectrum
  • Education – Your level of education, the effect it has had on your ability to generate income, and the effect it will have on your ability to generate income in the future
  • Health – Your ability to stay healthy and remain in the workforce. This part of the test is especially helpful to those with chronic diseases or life-threatening conditions likely to reduce their ability to continue earning an income
  • Dependents – Essentially, your expenses. This test makes it easier for those with more dependents to have their private student loans discharged, since dependents are seen as a serious burden
  • Good Faith Efforts – Your previous attempts to pay off the debt. This attempts to find out if your current financial situation was caused through irresponsible or negligent behavior by evaluating your attempts to maximizing income and minimize expenses

How do you satisfy these conditions?

Just like the Brunner test – you’d better look like you’ve tried to pay off your debt, minimize expenses and reduce the amount of money that you “wasted” on inessentials. If you’ve got a lot of cool stuff, took some vacations or remodeled your house, then you’re probably out of luck.

The Totality of Circumstances Test

In our opinion, this seems like the most fair test of the bunch, since it purports to consider situations on a case-by-case basis.

The Totality of Circumstances Test seems more likely to want to help you win approval for winning private student loan bankruptcy discharge.

This test seeks to evaluate whether or not you have the ability to repay your debt based on the following conditions:

  • Your Past, Present & Future Financial Resources – How much money have you been making? How much are you making now, and what will you be making in the future? Will it be enough to provide for that minimal standard of living?
  • Your Reasonable Living Expenses – Based on the number of dependents you have, what is a reasonable estimate for your actual living expenses? How much money do you really need to get by? And will the private student loan prevent you from doing that?
  • The Duration of The Hardship – How much longer will you have to work to pay off the loan? Are you temporarily, or even permanently disabled? Do you even have enough time left in your life to work off this debt?
  • Your Attempts to Pay It off – Have you sought out other available options for debt relief? Did you attempt a loan modification, refinance or consolidation? Have you borrowed money from other lenders to pay for this loan? Have you cut costs in non-essential expenses?

How do you satisfy these conditions?

Same way as the Brunner and Johnson test – you’d better look like you’ve tried to cut costs, limit your expenses, and paid off that private student loan, or you’re not going to win approval for having the debt discharged via bankruptcy.

The Bryant Poverty Test

This test is the simplest, and probably the hardest to qualify for, unless you’re really having trouble making payments and providing for your family.

Unlike the other tests, this is a pretty simple numbers-based approach to determining whether or not your loan leads you to face an undue hardship.

Here how it works:

  • Is your after-tax net income near or below the federal poverty level?

That’s it!

How do you satisfy this condition?

You’d better not be making good money, no matter what your expenses are. Even if you’ve got 10 dependents and a ton of other debt, if you’re making enough money that you’re nowhere near the established federal poverty level, you’re not going to get approved for discharge here.

Which Type of Bankruptcy Should I File?

It’s important that you consult with a bankruptcy attorney on this point, because Chapter 7 and Chapter 13 bankruptcy’s work in very different ways.

You’ll face very different consequences from the two types of bankruptcy if your request for discharge gets denied, so choosing the right one can stand to save (or cost) you tens of thousands of dollars.

Here’s what happens if you fail to receive approval for having your debt discharged via the undue hardship tests:

  • With Chapter 7 Bankruptcy – You won’t have any other options if you fail to receive approval for discharge. Once you’ve been denied discharge, you’ll still owe your lenders the full amount of your private student loan debt once the bankruptcy case has ended.
  • With Chapter 13 Bankruptcy – You will have some other opportunities for financial assistance if you fail to receive approval for discharge.

Filing for Chapter 13 will give you a little more wiggle room if you don’t end up qualifying for private student loan discharge during your bankruptcy arbitration.

You should speak with a local bankruptcy attorney to find out which type of bankruptcy will be the best option for your specific financial situation.

Chapter 13 vs. Chapter 7

If it doesn’t seem likely that you’re going to be approved for a discharge via the undue hardship rule, then filing Chapter 13 is probably your best option for getting back on your financial feet, especially if it’s your private student loan debt that’s causing you so much financial trouble.

When you file bankruptcy under Chapter 13, you’re essentially agreeing to perform a debt “reorganization”, which restructures your debt (rather than completely erasing all of it), and allows you to pay it off in a way that prevents you from being forced into poverty.

Chapter 13 debt reorganization plans are a tool to buy you time to save up money so you can catch up on those bills that you can’t afford right now, whether it’s a late mortgage, overdue car loans or late payments on private student loan debt.

The best reason to file using Chapter 13 is that you’ll have better options for additional assistance if your request for discharge gets denied during bankruptcy proceedings, whereas with a Chapter 7 bankruptcy, you’ll still owe the full amount of your private student loan debt, and you won’t have any other opportunities to get it reduced.

Benefits to Filing Chapter 13 Bankruptcy

There are some significant reasons why you should consider filing bankruptcy under Chapter 13 if the main goal of your bankruptcy is to help tackle private student loan debt.

Here are the major benefits to filing bankruptcy via Chapter 13:

  • Your Chapter 13 plan (the debt restructuring plan that you put together) will determine the size of your monthly student loan payments, rather than your lender, potentially saving you hundreds of dollars each month
  • You’ll get to make payments at the level you’ve laid out in the Chapter 13 plan for 3-5 years, however long your reorganization plan is set up to run for, potentially saving you thousands of dollars in reduced student loan payments over that 3-5 year period of time
  • You will still owe whatever’s left of your student loans after you come out of bankruptcy (at the end of the 3-5 yeras that your reorganization plan lasts for), but you can attempt to discharge what’s left of you private student loan debt again using the undue hardship rule
  • You won’t have to face any collection actions while you’re making repayments under your Chapter 13 debt reorganization plan, so no collectors will be able to harass you for that period of 3 to 5 years
  • You might be able to assign priority to your private student loan debt during the course of your Chapter 13 plan, allowing you to focus on paying off your student loans and ignore other debts for that period of 3 to 5 years

Only a local bankruptcy attorney can advise you on how this process will play out for your specific situation, and on whether you should choose to file under Chapter 13 or Chapter 7.

Raising Defenses in Bankruptcy Proceedings

Another tool in your arsenal – though you’ll need to consult with an attorney to figure out how to use it – is that you may be able to “raise a defense” in your case, claiming breach of contract, unfair or deceptive business practices, or fraud as defenses to continuing payments on your private student loans.

The way this works is that you have to convince the court that you’ve been swindled by agreeing to rack up huge student loan debt on the promise of future employment or financial gain that hasn’t been realized and isn’t likely to get realized in the future.

The key point is that the court will have to agree with you that your education credentials don’t live up to the hype that was promised, and that you’re in a worse situation now than you were in before you went to school.

Essentially, your argument is that yes, you did rack up a ton of debt, but no, it wasn’t created based on a legitimate reason, and so it should be cancelled since you were essentially scammed.

This strategy works best with vocational or trade schools, like trucking schools, culinary colleges, pilot training programs, or other educational programs that aren’t offered at traditional colleges and universities, and especially those from schools or other institutions with terrible job placement performance.

For some great examples of successful attempts to get debt discharged by raising defenses like these, check out Steve Rhode’s recent article here.

Am I Likely To Receive Approval for Discharge?

It’s hard to say, as it depends on your specific situation, the court your case will be tried in, and the judge who will preside over your case, but there’s one simple trick to quickly find out if the odds are in your favor.

Applicable bankruptcy laws state that “qualified education loans” from “eligible education institutions” cannot be discharged, and the Department of Education keeps a list of institutions that meet this criteria.

The way you can use this to your advantage is to check if your school is featured on that list. If your school is not on the list, then they’re technically not an “eligible education institution”, and you’ve got a much better chance of getting approval for your discharge request since your loan may not be counted as a “qualified education loan”.

To see if your school is on the list of eligible institutions, go here, and search for it. If your school doesn’t appear, you’ve got a pretty dang good chance of getting an approval for bankruptcy discharge, and you should definitely consult with a local bankruptcy attorney.

A Short History of Private Student Loans Bankruptcy Law

Before 1978, any student loan debt was dischargeable in bankruptcy, without any exceptions.

Whether your debt was from private student loans, or federally-funded loans, you could get rid of it in full, 100%, by filling for bankruptcy.

Banks and other powerful financial agencies (the lenders offering student loans) realized that this was a huge threat on their financial solvency, so they lobbied Congress to change the law, and started winning some serious concessions.

Here’s a short timeline on how the bankruptcy laws governing private student loan debt have changed since 1978:

  • Pre-1978: All private student loan debt was eligible for discharge via bankruptcy, making it easy for people to discharge their student loan debt when they ran into serious trouble. This was great for those running into trouble, but bad for lenders.
  • 1978: Lenders convinced Congress to pass a new law requiring that people pay their student loans for at least 5 years before they’re eligible to be discharged via filing for bankruptcy, unless loan repayments “represented undue hardship” to the borrower (making it difficult for them to pay for basic needs).
  • 1979: Lenders lobbied successfully for a further tightening of the 5 year restriction, with the new law requiring that the 5 year repayment period couldn’t include any time that the student loan debt obligation was suspended, like during loan deferment or forebearance.
  • 1990: Congress passes new restrictions requiring that borrowers pay off their student loans for at least 7 years before they’re eligible for discharge via bankruptcy, and with the same stipulation that none of those 7 years could include any period of time that the loan debt obligation was suspdended.
  • 1998: Lenders land a huge win, convincing lawmakers to update the law so that private student loans aren’t dischargeable via bankruptcy ever, no matter how long the loan debt has been paid back. Even borrowers who had paid their loans off for 10, 15, or 20 years couldn’t discharge them via bankruptcy now.
  • 2005: Previously, a loophole had allowed loans that were not made under a “program funded in whole or in part by a governmental unit or nonprofit institution” to be eligible for discharge, but a new law is passed to prevent virtually 100% of private student loans from qualifying for bankruptcy discharge.

What’s Different About the Conway Case?

Typically, bankruptcy courts rely on the precedent set by the 1987 case titled Brunner v. New York State Higher Education Services to decide whether or not private student loan debt can be discharged during bankruptcy proceedings.

The so-called “Brunner test” that emerged from this case requires that debtors prove three things in order to receive approval for having their debt discharged:

  1. That they cannot maintain a minimal standard of living for themselves, and their dependents, if forced to continue repaying their private student loan debt
  2. That their inability to repay the loan while maintaining a minimal standard of living is likely to persist throughout the remaining lifespan of the loan
  3. That they have made a “good faith effort” to repay the loan

These conditions have left a great deal of wiggle room for judges to rule that borrowers shouldn’t be eligible for bankruptcy discharges, using logic like:

  • He may not be able to make the payments now because of unemployment or underemployment, but since he’s only 30, he’ll almost certainly be able to land another real job and start making payments again at some point in the future.
  • She may be having trouble making payments now, but once her children turn 18 and start fending for themselves, she’ll have enough disposable income again to resume making her monthly private student loan payments each month.

Fortunately, the reality that Americans face an entirely different economy in the wake of the 2008 financial crisis has apparently taken root in the minds of some bankruptcy courts, including the Eight Circuit, and has lead to a new approach in bankruptcy rulings.

Does Conway Set A New Precedent?

In the case of Conway v. National Collegiate Trust, the Eight Circuit Court recently ruled that Ms. Conway should be granted permission to seek discharges of about 20 separate private student loans, loans with a combined total balance of well over $100,000 in total debt.

Conway graduated from a well-renowned school with a B.A. in Writing, and was able to find full-time work in the field, but was then laid off from two different jobs between her graduation and 2008.

As a response to her major economic troubles, she filed for bankruptcy protection, requesting to have her private student loans discharged in the process.

Two of her private lenders agreed, but a third company called the National Collegiate Trust (NCT), contested the initial court ruling.

At the time of the dispute, Ms. Conway had a total of 15 loans from NCT, which carried a total balance of $118,579.66 (including interest).

Conway’s Initial Ruling

At first, the bankruptcy court in Missouri agreed with the lender (NCT), and refused to allow the debt to be discharged, arguing that while Ms. Conway certainly couldn’t afford to pay off her loans now, she had a college degree, “well-developed writing and reasoning skills” and “at least 30 years left to navigate the job market” so she could resume making payments on her debt.

Sound familiar?

As mentioned above, this court used one of the arguments from the standard Brunner test to reject her request for discharge.

The Appeal

However, when Ms. Conway’s appeal reached the 8th Circuit’s Bankruptcy Appellate Panel (BAL), the lower court’s decision was overturned.

Here, the Court noted that if Ms. Conway were to make the minimum standard monthly payment of $846.17 on all 15 of her loans, there was no way she would be able to maintain a minimum standard of living.

In this case, the 8th Circuit ruled that each loan should be evaluated individually to determine whether or not they could be discharged.

This approach flies in the face of the gold-standard and more typical Brunner test, and instead uses the logic of the “Totality of the circumstances” test, which determines whether or not repayment would be deemed a hardship by using the debtor’s past, present and expected future finances.

In ruling that Ms. Conway deserved to have her debts discharged, the BAL used her current income as a server (rather than her future expected income as a professional writer) to calculate her monthly expenses, explaining that she clearly faced an undue hardship in this case.

What’s Next?

This case paves the way for others in a similar situation as Ms. Conway to be evaluated for having their private student loans discharged via bankruptcy.

Especially interesting to me is the fact that the Eight Circuit wrote of their decision to use her actual wages rather than her anticipated future earnings, noting that they would “not substitute assumptions or speculation for reasonably reliable facts.”

While this decision can be seen as a major stepping stone in the nation-wide campaign against crushing private student loan debt, it should be noted that the precedent it sets is quite narrow in scope because:

  1. The ruling only applies to the Eighth Circuit, which includes North and South Dakotah, Minnesota, Nebraska, Iowa, Missouri and Arkansas
  2. The ruling is not yet a formal discharge order (meaning that Ms. Conway’s debt is not officially discharged yet), but instead an order for the lower bankruptcy court to evaluate each of her 15 student loans to determine their eligibility for discharge

However, it’s possible (and perhaps even likely) that this ruling could serve as a catalyst for a sea-change, opening up the potential for tens of thousands of other borrowers to have their private student loan debt discharged via bankruptcy, and saving many of this website’s visitors from a lifetime of debt slavery.

We’ll keep you updated as things progress in Ms. Conway’s case, so please be sure to check back soon for additional information.

For Additional Information

If you have other questions that weren’t answered here, please feel free to ask them in the comments section below.

Keep in mind that we can’t provide legal advice, but we are willing to offer you any other assistance, and we’ll do our best to get you a response in 24 hours.

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Tim's experience battling crushing student loan debt led him to create the website Forget Student Loan Debt, where he offers advice on dealing with excessive student loans and advocates a cautious approach to funding education costs via borrowed money.

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  1. Travis Adams says:

    I have a question regarding raising a defense. My goal from the start of my college education was to become a doctor. With the expectation of making 150k-800k a year (depending on specialty) I did not hesitate to take out student loans in excess of 200k. That was for tuition and room and board for 4 years of undergrad, 2 years of graduate, and 1 year of Med school. However I was unable to keep up with the rigors of med school and a family so I dropped out. I was luckily able to find a great job at $81k but the crushing payments (40% of net income) is ruining my family. Is there anything I can do? Would my circumstances be a good defense to raise in court or will my good income automatically disqualify me?

    • Hi Travis,

      Unfortunately, I don’t think you’d be able to qualify for getting your loans discharged via bankruptcy, because at $81,000 a year, you’re making far more than what the Government deems as necessary for a family, even a large one. Have you looked at the poverty line income levels recently? They’re set at appallingly low numbers, and are likely to end up disqualifying someone like you from a benefit like this.

      However, with that said, I would advise that you speak with a local lawyer who specializes in bankruptcy law, and who has experience getting student loans discharged, to see what they think. It might not cost you anything, or it might cost a few hundred dollars, but it could stand to save you over $200,000, so I think it’s worth it.

      Good luck!

      • I have over 98,000 in private student loans. My yearly income is $11,400.00 a year, and I became disabled after graduating, and I can not make the minimum payments, and still be able to live period.
        Do you think I could qualify for discharge of my private student loans.

  2. Jamie Hernandez says:

    I have a question to ask. In 2007 I took out two private student loans that were $25000 each to attend a audio engineering school that was located outside of my state that was a 7 month program. I lived on these loans while I went to school and did my internship. I finished the school and winded up moving to another state to do my intership which I completed. I was told at my intership that I would have to stay doing another intership for awhile which they did not know how long before they decide to hire me as a paid employee. To let you know this was a full time intership 40+ hours a week and working odd hours. There was no way I could survive living in Miami by myself with no pay so I decided to move back home in New Mexico. So here in New Mexico I got an internship working on movie that lasted two months. Samething working odd long hours and no pay. I was told that I would have to do like 5-6 interships before I could work for the union. I’ve have also tried other places to get into but of course I had to do internships with no pay. This became an issue becuase I am a single mother that has one child and am raising on my own. My sons father two years after I recieved the student loans, got incarcerated and will be in there for 19 years. So with him locked up I have no help financialy to raise my son. Having that kind of job will not work for me as long as I”m raising my child. I also had a job making good tips and was paying down my debt and then the recession hit and I was no longer able to pay down my debts anymore and every year since then my income would drop $5,000. Right now Sallie Mae has me on a income base repayment program that I have been on for 3 years now. First year was at 1% with payments of $336 and third year I’m at 4% with payments of $466 and next year I’m worried. What sallie mae is trying to do is they are trying to get me back to 9% where I was originally was before I got on this program. I’m not gonna be left with anything. Right now all I have is $100 for the month after all my bills are paid. Also I just got a new job making a little bit more than last year but it’s still not gonna be enough to make future payments. I don’t even quailfy for assistance because they say I make to much. Right now my income is $20,000 a year and my student loan is at $74,000. Do you think I might have a good shot at going to court? I also tried looking at the department of educations website and did not see my school on there. Also about 3 years ago I filed for a chapter 7 bankruptcy can I reopen it again to do an advisory proceeding? I hope to here from you thank you.

    • Hi Jamie,

      Unfortunately, I can’t give you good legal advice, but I would recommend that you speak with a local bankruptcy attorney (try calling whoever handled your original Chapter 7 Bankruptcy to ask them for advice) to find out if it seems like you’ve got a shot.

      It sounds like you’ve got a chance, but Bankruptcy courts and laws are interpreted at the local level, and I’m from Southern California, so I have no idea what would happen in Miami.

      If you can’t get the debt discharged, keep in mind that President Obama’s student loan forgiveness program just got updated in a major way, making the Pay As You Earn repayment plan available to anyone with outstanding Federal student loans.

      In December of 2015, you’ll be able to enroll in the plan, which caps your monthly payments at just 10% of discretionary income, and offers comprehensive loan forgiveness after you’ve made 20 years worth of full, on-time payments.

      That may or may not help you, but it’s definitely worth looking into.

      Good luck!

  3. I would like to know the consequences of filing chapter 7 bankruptcy on a defaulted on a private student loan that had an original cost of 17k in 2004. That same loan is now 29k and in collections. I attended a state university and continued to take private student loans to fund my undergraduate education. I currently have 36k in debt that from private student loans which are good standings. I currently am struggling to pay rent and other student loans. The loan defaulted student in 2012. Since then it has destroyed my mother’s and my own credit. I don’t believe I am able to able to secure a lease for an apartment. I am seriously close to filing for bankruptcy within the next few weeks. My mother is a co-signer to my loans and I was informed that she would need to file for bankruptcy as well to avoid being sued. Her current monthly salary is under 2k. I earn around 1k a month with additional disability pay from the VA. I would like to know if I file for bankruptcy would I also be able to discharge private student loans that are in good standing.

    • Hi Mike,

      I wish I could offer you some advice here, but you’re going to need to speak to a lawyer. It would be extremely irresponsible for me to comment on your situation, especially since the advice you get could determine what you attempt to do, which is likely to have a major impact on your financial life.

      Please speak with a local attorney who has experience on successfully getting private student loans discharged by filing for bankruptcy, and ask them for an honest appraisal of your situation.

      Typically, you can only qualify for a discharge if you can prove that the loans are having a major negative impact on your life, basically causing an “undue burden”, which means preventing you from achieving a basic standard of living (like not being able to afford food, shelter, clothing, etc.).

      It’s possible that you could get an approval, but I wouldn’t want to promise you something that can’t be delivered.

      Keep your fingers crossed, talk to a lawyer, and good luck!

  4. Sandra Phily says:

    I have close to $95000 in PRIVATE student loan debt! I’m thinking chapter 13 will help me in some way and seeking a bankruptcy attorney (hope to conference with by end of week). I teach in Georgia and now make $42000 p/ year. It will soon be time to make regular monthly payments of $1500 or more p/ month, since my payments were deferred for going to grad school (for a Masters degree to up my salary) also (used Federal loans to pay for grad school). I made payments on my private loans around $120 per month for some of the interest. Do you think chapter 13 “might” be feasible? I do have federal loans and was eligible for Pay as you Earn, which has helped. I just need my private loans to work the same because $1500 p/month is not possible for a single person of no dependents but has living expenses. This coming up school year will be the first year in about 7 years of Georgia teachers not facing furlough pay (because of election year for state governor…how interesting). Thanks in advance for your feedback.

    • Hi Sandra,

      You are going to need to speak with a local bankruptcy attorney to find out if you have a chance at getting the student loans discharged via bankruptcy, but from what I can see, I don’t know that it will work.

      The problem is that you’re making $42,000 per year, which is far above the poverty level for the state of Georgia, especially for a single person with no dependents.

      I do not think that this strategy will work for you, but I’m not a lawyer, so please don’t take legal advice from me!

      Keep your fingers crossed, and good luck!

  5. Hello!

    I’ve been out of work since 2013 and still can’t find a job. Sallie Mae put my private loans in default. Can I file for bankruptcy? Also they claimed they charged me off January 31st, but it was stated on their website that my loans were in school forbearance. What should I do?

    • Hi Kimberly,

      Your best bet would be to consult with a lawyer to find out about your changes of getting a bankruptcy discharge. You’ll need to be able to prove that the loans are causing an undue financial burden on your life – basically preventing you from being able to pay for food, shelter, and other necessities, but it is possible to do that in some cases.

      Sorry to hear about the trouble you’re facing, it’s not easy to pay off your loans without stable employment, and it tends to just make things worse the longer the situation lasts, since interest will continue to accumulate along the way. Get on top of this ASAP and speak to a local lawyer with experience in student loans bankruptcy cases.

  6. Hi, in 2006 I started with 35k student loans both private and federal. Now it’s made it to almost 60k basically from capitalized interest. My payments kept increasing and with no help from the lenders I found myself overworked and stressed out with no hope. I always paid the minimum whenever I could but it kept increasing and no one cared. So last year I filed ch13 because my student loans payments was increasing and causing so much stress in my life. I was told that Ch13 basically shackles the lenders from collections but and the end of my program I will still owe the balance PLUS interest. My attorney isn’t really helpful in fighting the student loans. He basically tells me that there’s nothing I can do and that we can only hope that Congress changes the laws to allow student loan to become dischargeable again. I feel that it’s not impossible for me and I want to fight the student loans but there’s isn’t much help.

    • Hi Jen,

      It’s possible to get your private student loans discharged via bankruptcy, but only if you satisfy the conditions of one of the tests, and are able to prove that paying off the debt is preventing you from affording basic necessities like food, shelter, etc.

      You might want to speak with a different attorney, and focus on finding one who has specific experience working on bankruptcy cases involving student loans.

      It’s not easy to get this done, but it certainly is possible.

  7. Tim,

    I just want to thank you! This is the most impressive and informative article that I have read and could find anywhere. I finished graduate school at Columbia University in 2005, intent on designing educational programs.

    I haven’t had a job in my field with an income that affords me to pay down my loans, live comfortably, and achieve the things I want for myself.

    I’ve been unemployed for the last 6 months, and finding it difficult to find any gainful employment. I would have benefited greatly with some solid objective financial advice before I took out federal loans and private loans to cover an Ivy League education.

    For the federal loans…there’s a bit of leeway there with multiple deferment and forbearance programs… but the private loans are pretty unforgiving.

    I’ve talked with many reps from Sallie Mae and they won’t offer me forbearance or deferment because I exhausted those options when I did a
    teach abroad program and later was in grad school, and no options for lower payments or lower interest.

    Financial aid counselors at Columbia advised me to go into default and pay whatever I can when I can. With no job, a diminishing bank account, and lingering loan debt along with the continued costs of living, I cant help feel trapped!

    Your website and this article has been so helpful and empowering towards making some decisions to get ahead.

    I’m considering bankruptcy for the private loans.

    My next step, as you advised is to talk with a bankruptcy attorney.

    • Hi Angela,

      Thank you for stopping by and sharing our story!

      I’m sorry to hear about what you’re going through, and even more upset that it’s becoming such a common occurrence these days – so many recent graduates are in the same position as you, dealing with unmanageable debt.

      Hopefully, new legislation will be forthcoming soon, because we need to get everyone back on their feet, signed up for realistic, affordable repayment plans, and working toward paying down the loans that they took out, but without facing excessive penalties for over-borrowing.

      I hope you get good news from the bankruptcy attorney, and would love to hear how things go, so please stop back and let us know what you find out as things progress.

      Good luck!

  8. Hey, so I went to an international school in Scotland as I thought that a degree in English would be a good idea. Came home, got a job teaching at a University as an adjunct, but I needed an MA in Applied Linguistics for the full time. Done. Now I’m making $40k a year and my student loan payments are over a grand a month… I LITERALLY do not have enough money. My fiance has been helping me financially, and I just can’t do it anymore. I had to put my loans (private) into a I will only pay interest for two years thing, and it’s about to run out. I have over 100k left of student loans… but what do I do? Is this an option?

    • Hi Kp,

      Sounds like you’ve gotten yourself into quite the pickle. I don’t know that a bankruptcy discharge would be realistic for you, because it sounds like you’re still making too much money ($40k is well over the poverty line, especially for a single person without any dependents), but you have accumulated so much debt that you may have a chance.

      If I were you, I’d contact a local bankruptcy attorney to ask them for advice. It may cost a couple hundred bucks, but if it could save you $100,000… wouldn’t that be worth it?

  9. It’s informative and encouraging to read people stories and to take action ASAP. I have a question that no one has asked yet: Does filing for bankruptcy help or hurt your cosigner?


  10. hi. my fiance is a co-signer on a private loan. his “FRIEND” that he co-signed for lives out of the country in jamaica. she has a goo job and no kids. my fiance has been busting his but trying to stay a float with this loan. he has two jobs works odd hours and seven times a week. he had to get an other job just to pay for the loan because she makes no effort to take over the loan. he has tow car accidents on his way to work to pay for the loan. he had to move back with his father. he also has a son. we live together and i of course help him anyway i can but i am afraid that he will hurt himself one day trying to pay this loan. he has developed a terrible sleeping schedule where he can literally fall asleep standing. he has made all the payments on the loan but he also has his own bills to pay he sometimes just barely makes it .. can he be qualified to file bankruptcy??

    • Hi Enrika,

      I would recommend that he speak with a local bankruptcy attorney to find out if he might qualify for a discharge. His case sounds like one that a judge would offer leniency over, especially since he’s just the cosigner who was left holding the bag when this friend of his fled the country.

  11. Tim,

    I took out over $125K to pay for my medical degree. However, with the growth of HMO’s etc., my income has never exceeded $125K. With 3 kids etc, I have made my payments on time. It has been a big burden on my family and my ability to save for retirement. My question is that these loans originated between 1988 and 1992. My understanding is I do not qualify for Income Contigent and therefore cannot have my loans discharged at the 20year mark. I find this very unfair. After paying 20 years of payments, I still owe more in principal than I originally took out (due to several forebearances in my early years and residency deferment). I sanything being talked about us older borrowers?

    • Hi Terence,

      I am in total agreement with you that the situation you’re facing is entirely unfair. President Obama played total politics when he instituted a student loan debt relief program that only worked for recent borrowers (people likely to vote for him anyway), and which essentially screwed faithful, long-time borrowers like yourself, who have oftentimes already paid off more than they originally borrowed in the first place!

      The good news is that there is a light at the end of the tunnel. According to the President’s 2015 fiscal year budget, his Pay As You Earn program should be opening up to ALL holders of federal student loan debt, meaning that no matter when you borrowed, you’ll be able to get enrolled in the program.

      Forget about the Income Contingent Repayment plan though, what you need to look into is the Public Service Loan Forgiveness Program. Since you work in the healthcare field, you might be able to qualify for a PSLF discharge at some point in time. It’s unlikely that you’ll receive credit for the payments you’ve already made (I haven’t seen that on the agenda for any updates to the law), but at least you could start getting credited for payments you’re making now.

      Should everything go according to plan, Pay As You Earn (President Obama’s forgiveness program) and the Public Service Loan Forgiveness Program would allow you to receive loan forgiveness after just 10 years of qualifying payments, which is likely to save you a great deal of money if you still over more than $125,000.

      Don’t give up! Check out my my page about the Public Service Loan Forgiveness Program, then contact your lender if you believe that you qualify for the benefits, and start working toward your eventual loan forgiveness.

  12. Hello,
    I have about 54k in federal loans that are being repaid on IBR and another 68k in private loans that I have not been able to keep up with. I am making only 35k a year (good pay, but not enough to keep up with IBR payments AND private loan payments, car payments, food, gas, car insurance ect). My private loans have been in default for awhile and have been sold from one collection agency to the next, over and over. I cannot keep track anymore of who owns what or how its been split up. I recently got a letter from a “law firm” claiming about $34k worth of the $68k. My question is: is it true you should never claim the debts are valid? Dispute them as invalid and force the collection agency to produce proof? Also, if this law firm owns about half the private debt now, where might the other half have gone? Another collection agency? I dont care that they have destroyed my credit and I can never hope to own a home or car EVER for my whole life, but I am terrified of wage garnishment as I can already barely get by. I know I will not qualify for discharge because I can still maintain a “minimum standard of living” but I think that is just terrible. I didnt go to college to achieve a “minimum standard of living,” I went there to actually have a comfortable life. Now I am 100x worse off than if I had never gone to college in the first place.

    • Hi Melanie,

      I’m sorry to hear about your situation – once your loans go into default it pretty much becomes the Wild West, and the biggest problem is that the debt collection agencies and law firms will say or do just about anything to scare you into paying them as much as they can squeeze out of you.

      I would suggest that you try to get your loans discharged via bankruptcy, because you aren’t making that much money, and you owe significantly more than you make each year.

      I don’t want to offer advice on never claiming the debts are valid, because this is a legal issue and I’m not a lawyer, but if I were in your shoes, then yes, I would force them to produce proof (absolutely!).

      One thing you might want to consider is getting some advice from a lawyer who specializes in student loans, as they would be your absolute best bet on determining the proper course of action here.

      I wish I had better information or more optimistic advice for you, but this is a tricky situation and I don’t want to steer you wrong.

      Good luck out there, and please come back to update me on what happens next. Keep your fingers crossed and don’t give up!

  13. Hi –

    I’m currently filing for bankruptcy and was wondering if it will affect anything if I consolidate my loans before the case is done? I am going to try to get them discharged either way, but I was wondering if I should do the consolidation or wait until after I find out if they were discharged?

    • Hi There,

      I would recommend speaking with a lawyer about this. Because loan consolidation changes the legal structure of your debt, I don’t think you should be doing that while in the process of filing for bankruptcy.

  14. Hi, Tim! Here is my situation:

    I graduated from a private ministry school with a Bachelor’s, with about $48,000 in private loan debt. The only job that I have right now is as a dishwasher in a grocery store/restaurant. I make about $1,000 a month, most of which goes toward loan payments. I can hardly afford transportation, I can almost never pay for my own food, and I cannot even pay $200 as rent to my family, whom which I live with. I am in talks to work in a school in Honduras, which is my fiance currently lives, but I do not believe that I would be able to cover my loan debt if I were to live down there. I am looking into as many options as possible, but I am wondering if filing for bankruptcy is a viable option for me. Thank you!

    • Hi Alfie,

      I would certainly speak with a lawyer about your situation, and definitely consider the bankruptcy discharge. It sounds like you’re living below the poverty line, so you shouldn’t have too much trouble proving that student loan debt is crippling your ability to meet basic needs.

      Be careful though – if you’re taking vacations, buying new personal items regularly, etc., then the court and judge are not going to believe your argument. If you’re really barely struggling to get by, then you’ll at least have a shot at getting your student loan debt discharged.

  15. I am being taken to court for my private student loan. The fed is already garnishing my paycheck for the federal loan. I have 3 dependents, and I make under the poverty line in my state. I know this because I do qualify for and receive public assistance. I think I am a candidate for bankruptcy relief, but will be speaking to an attorney later this month. What I am wondering, is when the private loan company secures the judgement against me, does it automatically mean garnishment from my paycheck? And if it is then a judgement, and not an outstanding loan, can I then qualify for bankruptcy relief?

    • Hi Dawn,

      You’re going to want to speak to the lawyer about this. I am not a lawyer and it would be irresponsible for me to provide you with any legal advice.

      Wish I could help further, but I definitely don’t want to steer you in the wrong direction. If you want a quicker answer, my suggestion would be to ask the same question here:

      • Hi. The student loan that I am seeking relief from was not used for educational expenses. Is it possible that I can get links to some of your research to present to the bankruptcy attorney?

  16. Margaret Gardner says:

    I am 69 years old, am being sued for cosigning private student loan in 2006, student graduated, was working has not paid on the loan since 2010. I am trying to get my own bills in order so i can retire. If i have to pay this loan off it will take 9+ years at what they are asking for monthly. They offered a settlement of $34K but i do not have that kind of money laying around. I would like to know if anything is being done on the student’s end of things. Are they taking her to court also?

    • Hi Margaret,

      I’m sorry to hear about your situation, and unfortunately, there’s no way for me to give you that information.

      I would fight this with everything you’ve got. Have you spoken with a local attorney yet? Don’t agree to anything before speaking with a lawyer and finding out about your options. You may have co-signed on the loan, but you shouldn’t be completely responsible for the debt.

  17. I got kicked out of school through no faught of my own they received a judgement, put lien on my husband’s property, he purchased before marriage they will 10% of my retirement which is only $728.00 amonth they want $500.00 a month this a private loan, when I asked will this affect my husband they said no, he did not want me to take out the loan, I became disabled heart trouble, depression, back troubles’ this is a LVN program to help people and they do not care if I die with all the stress this is causing me the Goverment will work with you these people are the devil no way out I already told them I’m sick no money they keep come she say’s we won the judgement we don’t care that’s what she is saying you owe the money I gruduated from another school I was late with my responce because I could not walk are see and had a blood infection for over two year’s help will they shut down my husband checking account if I file Banrupcy, because that little money pay’s the rent and other bill’s and can they make us sell our home. Wish someone would have warrned me about this company and school.

    • Hi Dan,

      I’m sorry to hear about your situation. What is the school and what is the private lender that you’re working with?

      Fortunately, the Federal Government offers an excellent program that might help you, called the Total Permanent Disability Discharge, which allows you to completely wipe out any student loan debt if you’re fully disabled and can no longer work or go to school.

      I would suggest that you look into this right away, especially if your health problems are preventing you from being able to earn an income or study.

      You can get more information about TPD discharges here:

      For your question about filing for bankruptcy, I would advise that you speak to a lawyer about this, as I do not want to offer misguided legal advice here, but I do not believe that they will shut down your husband’s checking account if you file for bankruptcy.

  18. Do you think it would be possible to discharge 325k in student loan debt? I only make about 36k a year and theres just no way that I could pay that off. I have defaulted because I can only pay 2 of the private student lenders the rest I just can’t afford.

    I never even finished my undergrad degree. Would this be an option Ch. 7 Bankruptcy?

    • Hi Anthony,

      I do think you might have a shot at getting this discharged, considering it’s a third of a million dollars in student loan debt, and that you only make a third of a hundred thousand dollars a year.

      It doesn’t seem like there would be any way to possibly ever pay that off at your income level, so a court may side with you and rule that this debt is placing an undue burden on your life.

      I have to ask though – how on earth did you manage to rack up that much student loan debt without finishing your degree? To be completely honest, that’s the highest number anyone has ever come to me with!

  19. Tim
    I have been writing a blog for several years about finding solutions to the $1.2 Trillion student loan debt that is growing faster today than ever before. I now beleive that both Federal and Private student loan bankruptcy need to be reinstated.
    I spent hours most days looking for students that have been able to pass the burner test I have had very little success
    Would you please give 5 examples…

    I would like your thoughts

    Thank you


    • Hi Tony,

      Thanks for stopping by, and your Blog looks fantastic by the way! I am totally on board with your sentiments, and am hoping that bankruptcy laws are changed to make it easier for people to get out from under crushing student loan debt.

      My opinion is that we’re building a student loan bubble about as dangerous as the real estate bubble that popped in 2007, and I’m pretty scared about what will happen to the economy should this thing pop.

      The best examples I’ve found for people who were able to pass the Brunner test (or one of the other test variations in play) was from an article written over at Get Out Of Debt dot Org, which you can find here.

      It’s not all that recent (dates back to July, 2013), but I do think it provides some good examples of people who were fortunate enough to receive approval for discharging their private student loan debt.

      Thank you for stopping by and commenting!

  20. The year I graduated from high school, my father was murdered and my mother was a remarried house wife. My father had no life insurance and social security stops at 18 no matter what! My stepfather’s income proved way too high and as a result, I was ineligible for any financial assistance. My stepfather and mother believe that college is a privilege and not a right, so they got me a credit card at 17 to establish my own credit because they said they would never cosign my loans. As a result, my student loan interest rates are 12% annually. So I went to Temple in 2005 and halfway through I switched my major. I had one class to go to graduate, but could not get a loan to finish. I worked for a year to save the money but had to start paying back my student loans 6 months after. I have over $120,000 dollars in student loans and I’ve never made over 20,000 a year. The first year, Sallie Mae had me on a payment plan of $150 every 3 months (their versionof deferment) . When that year was up, they told me to pay $900 per month, and 2 months after I lost my job. I told them I lost my job and sent them proof of unemployment and they told me there wAs nothing they could do. This went on for another year with people calling and harassing me. One person from Sallie Mae even told me that I don’t have a job because I’m lazy! Then the next year they said it was my last chance to make a deal at $350 a month. I got a new job making 16,000 a year and I agreed to pay the $350 a month, which I have been doing from 2014 to 2015. I don’t have a house, a car, and I’ve been using a flip phone on my family plan and I’m approaching 30 years old. I can’t even afford to start a family. Yesterday, sallie Mae sent a letter saying that they will be ending this $350 per month “deal” next month, and it will go back up. I have been struggling for 5 years and I went to Temple to see if I can beg my stepfather for extra money to go back, yet Temple University said that they no longer offer my major and I willhave to start over. Without a degree, I do not see higher income in my future. Do you think this would make me a good candidate for chapter 7?

    • Hi CiarrA,

      Sorry to hear about your situation, it definitely sounds extremely stressful!

      I would definitely consult with a lawyer, because it sounds like you’ve got a great chance at arguing that your student loan debt is interfering with your ability to provide for basic living standards. You should pursue this with total commitment, because it may be your only chance at getting this debt erased.

  21. Aboout 8 years ago, my 15 year old son had huge medical problems, mostly due to addictive substances and other mental problems. He was in and out of various rehab facilities and finally it was reccommended that he be sent to an “emotional growth” high school in Montana. The cost of the school was about $125,000 for a 20 month program. I was able to pay approx $50,000 of the cost , but when faced with the total, sought relief from the school. They referred me to an educational broker who got us a “Prep-gate” -k-12 education loan for the balance of $80,000. with Bank of America.
    Initially, we were able to make the monthly payments, but when I lost my job, we requested a forberence/ deferment of the payments and were granted some time. Payments have now started again. I am 67 years old and am basically living on Social Security and doing some part time work … under $10,000 per year. My wife is also approaching Social Security age and is earning very little –$12,500 per year. We have consulted a bankruptcy attorney as our credit card debt has become a problem. We are considering Chapter 7. In order for the lawyer to help us in bankruptcy with the student loan debt, he requires a substancial retainer ($10,000) because he says we will have to sue B of A.

    He says that in order to get out of the B of A loan, it can only be forgiven in bankruptcy. First of all, do you have experience with a loan of this type? Hard to understand that it is classified like a college student loan. Our view is that it was a medical necessity. 2ndly, is it also your opinion that we will need to file bankruptcy in order to have a chance at eliminating this debt?

    • Hi Paul,

      I wasn’t even aware that these types of loans existed. I’ve never heard of “Prep-gate” loans before, but I will definitely be looking into them when I have the time.

      I would seek a second opinion from another lawyer, just to make sure that you’re not wasting your money.

      I have no idea what your odds are on having that loan discharged via bankruptcy as I’m not familiar with these types of loans at all, and it sounds like you guys may be making too much money to qualify for the discharge, but that depends on how many other dependents you have, the laws in your local area, etc.

      It’s never easy to have student loans forgiven via bankruptcy proceedings, unless there’s an overwhelming amount of debt and very little income to support it, but it does sound like you may have a shot at this.

      I just wouldn’t want you to spend the $10,000 for nothing, which is why I think getting a second opinion (and perhaps a better price), might be a good idea.

  22. michael bombard says:

    I have about $300,000 in student loan debt. The majority of this is default charges. My paychecks are garnished, and only make $41,000 a year as a probation officer. With my credit ruined I fear what will happen to me. I’m 52, no savings, no chance of getting liscenses in any state as a Counselor. I’m terribly stressed 24/7, no sleep, constant anxiety, HELP.

    • Hi Michael,

      It sounds like you’ve made some very bad decisions when it comes to your student loans, but the good news is that you may have a chance of getting your loans discharged by filing for bankruptcy.

      The bad news is that you will have to put in the time and effort to make that happen. I can’t do anything for you.

      Call a local attorney and find out what your options are. Make sure they are well-versed in bankruptcy proceedings, and try to find someone who has actual, direct experience in student loan cases as well.

      Good luck.

  23. I was wondering how it works to file bankrupcy with my private student loans having a co-signer…how will it affect them….also how long do you have to be in hardship to qualify for bankrupcy….Thank you!

    • Hi Michele,

      Filing bankruptcy would definitely hurt your cosigner, and bankruptcy lasts on your record for 7 years.

      Your credit will be ruined during that time period, but it eventually goes away.

  24. Hi Tim,

    Do you have a listing of reputable lawyers you would suggest for somebody wanting to look into bankruptcy? Or maybe a list of things to look out for? I would like to make the investment to talk to one, but I have absolutely no idea what to look for in a lawyer.

    I have about 120k in student loans, about 50k of which is in private loans. I have IBR for the Federal loans, which helps, but the private loans take nearly half my paycheck each month and they won’t be paid off for 20 years.

    I am only a part time teacher, making 25k a year to support both my husband and myself. My school is on that list, so I don’t think I would qualify, but I would still like to talk to a lawyer.

    Maybe the lawyer can help the lenders work with me to lower my monthly payments to more reasonable amounts?

    • Hi Renita,

      I do not have a list of lawyers, but I can recommend that you speak to someone with direct experience in working out settlements for private student loan debt.

      I’d be careful here though, because it sounds like you may not be eligible for a bankruptcy discharge. You need to do the math and look at the poverty level for your state to see if you’re anywhere near that line.

      If you make $25,000 a year, and it’s just your husband and yourself, then you may not be considered poor enough to qualify.

      This is not an easy situation, and I realize it’s extremely stressful, but I don’t want to steer you the wrong direction. Do you know anyone who’s a lawyer, or have any friends who can refer you to somebody?

      If you can’t find any other options, consider going to Reddit and posting in the legal advice forum here.

      They may be your best bet before going to someone in person and paying for advice that won’t help.

  25. Weird question:
    I have federal loans for undergrad. I got into med school and had to take out private loans as my school had not graduated it’s first class yet, and we were no eligible for US Dept of Education loans. The loans were provided by the owner of the school at 8.5%. COMPOUNDING. Also, since my school was not recognized by the US Dept of Education, I also had to maintain enrollment in grad school while simultaneously attending med school or I would have had to pay my loans while in med school.
    I am now a single mom to 1 child in residency. My prospects for income are 130-180K/year in primary care. I currently cannot even pay interest on my loans /month is greater than my take home pay.

    My student loan debt when I graduated med school was 500K. With compounding interest it will be appx 800K when I finish residency.

    I know I can’t get rid of my US Dept of Ed loans. Do you think I have a chance of discharging the private loans ? Guessing they make up at least 400K of what I owe.
    After malpractice and taxes come out, even if I live well below “my means” and put everything toward my debt, the compounding interest on the loan is going to kill me and I don’t think I’ll ever get on top of it. I’m 40… my kid’s going to be going to college in 7 years…

    Do I have a prayer of ever getting out from under this?
    And if not, is it unethical to accept hundreds of med students to a school and only allow them to take the student loans that you provide? Should I pursue something under unethical lending practices?

    • Hi Jesse,

      Actually – you can get rid of your U.S. Department of Education loans, that’s the easy part. Get on one of the Income-Based Repayment Plans, make minimum payments, and then have your Federal loans discharged via the Public Service Loan Forgiveness Program. You’ll qualify for that after just 10 years of making minimum payments.

      The Private loans are the hard ones to get rid of, especially because you’re going to be making so much money as a Doctor. You may think that $130,000 – $180,000 doesn’t sound like much, but that’s a whole hell of a lot more money than most people make these days.

      The only possible thing that may give you a shot at getting these loans discharged is that they’re going to be outlandishly high. $800,000 is an absolutely ridiculous number, and the court may want to help you get out from under that because it’s unreasonable.

      You need to speak to a lawyer though, and right away. I do not think that the school would ever be prosecuted for what they’re doing. Wasn’t it clear to you how this would work from the outset?

      Is it really unethical for them to get you a loan that they think you’ll be able to pay off in 30 to 50 years down the line? Can’t they assume that your $130,000 to $180,000 per year income is enough to pay back the debt, as long as you’re allocating enough income towards paying it off?

      The only saving grace here is that you do have an insane amount of debt that a reasonable court and judge may find totally unreasonable, especially considering that it was lended to you by the institution who provided your education. That does sound suspicious, and you might win some favor if that’s the tack you choose to pursue.

      I’m concerned that if you try to start an unethical lending deal here, you’re going to look like you’re seeking excuses for making a poor financial decision, and that would wipe out the possibility of ever getting approval for a loan discharge.

      Speak to a lawyer, today.

      • Thank you sir!
        Appreciate your input. I would prefer to pay off any and all of my debt. I just don’t know if I’ll be able to get on top of it with the interest.
        I will find a lawyer and a financial adviser as soon as possible.
        Thanks again,

  26. Do you have any recommendations for an attorney in Oklahoma that might be willing to look at our case as we have $277,000 in private student loans? Thank you.

    • Sorry Amber, but I don’t have any relationships with attorneys and can’t offer you any advice here. I would check Yelp reviews, call 3-5 different offices, speak with any of them that offer free consultations, then go with whoever you feel more comfortable with.

      Sounds like you guys have a pretty large debt hanging over your head. As long as you’re not making great incomes, you may have a shot at getting it discharged.

  27. Hi,

    Thanks for your help! My husband and I owe a total of $300,000 in student loan debt. Our monthly payments are over $1,600 a month. We are a family of four and our monthly income is not enough to cover everything, morgage, car, health insurance, etc. Our income last year was $75k before taxes. I am seriously depressed and cannot stop thinking about this massive number. Our private loans are $130,000 and the rest are government loans. Even though my income is above poverty level….$1,600 a month in payments for the rest of my life is simply too much! Any advice?

    • Hi Liz,

      First off, you guys borrowed way too much money to get undergraduate degrees, and I need to make this clear so that others who read this comment may be warned from making the same mistake.

      Second, it’s possible that you might qualify for a bankruptcy discharge, but unlikely considering you guys are basically the definition of middle class.

      Unfortunately, bankruptcy discharges are mostly reserved for people who literally can’t make payments of any sort, and would essentially die because of the strain their student loans puts on their finances.

      I would still speak with an attorney just to see if there is any chance that you have a case, as it would be worth investing a couple thousand dollars into exploring that option since it could save you a lifetime of debt.

      For now though, get on one of the Income-Based Repayment Plans for your Federal loans, and start negotiations with your private lenders.

      Tell them that you can’t afford to make the monthly payments you’re currently facing, that you’re considering defaulting on the loans and ignoring them forever (threatening them that they won’t get ANY money out of you), but that you’re willing to negotiate a new deal, with a smaller total amount due, and better repayment conditions.

      You’re going to have to be tough with the private lenders because they do this stuff for a living, but their job is to make sure that they get as much money as they possibly can from each of their borrowers, and if they believe that you’re really going to cut them off completely, then they might budge.

      Good luck!

  28. shelley m. says:

    what is a private lenders. Got my loan from D.O E. And went nelnet, Sallie Mae. Is this a private loan.

  29. Hello! I have a quick question. I’m wondering if I stand a good chance to qualify for a discharge or even reducing my debt. I have no job and can’t seem to get one in my field of study (game design) so my private student loans are being paid by my parents and they are barely scraping by. The loans have such high interest that my parents are only able to make the minimum payment ($700 a month) and in turn the loan amount doesn’t go down, in fact it increases by the end of the year. I’ve been making $0 a year and my parents make around $38,000 a year. Any advice is greatly appreciated.

    • Hi Liz,

      I wish you hadn’t gotten a degree in that field… you will probably never be able to make back the money you invested in such a niche market, but a lot of others have been tricked into doing the same thing by fancy marketing programs and deceitful promises.

      How old are you? It sounds like you may have just graduated, or recently graduated? I do not think you’ll be able to get a discharge because it sounds like you’re young, and so you’d have plenty of time to get a job and work at paying back the loan.

      It doesn’t matter if you can find a job “in your field of study” or not – your responsibility (in the court’s eyes), will be to find stable employment and start paying off the loans.

      However… because your loans must be pretty large (if $700 if the minimum payment), it MIGHT be possible for you to get a discharge. The only way to find out for sure will be to speak with a local attorney. I would recommend that you do that as soon as possible.

      And get a job doing something, whether it’s game design or not. Being unemployed and trying to claim that you just couldn’t land a job in your field is not going to help you win the favor of the court. They will think you’re lazy.

  30. Hello, I need help. I have been paying on my private student loans for 30 months. My first payment was 847.00. I was put on a payment plan through Navient, then Sallie Mae and I paid 575.00 for 15 months. 625.00 for 6 months and then the last 8 months I have been paying 612.00. I can’t keep doing this. All my bills are behind, one credit card just got closed because I can’t stay on top of it with the finance charges and stuff. I don’t even use it.

    I have tried to consolidate them, but no lender will consolidate them because my credit is bad, BUT my credit is so bad because of my student loans. I am an Indiana Social Worker and I don’t make enough money to live and continue paying this much. Navient has told me they will not lower my payment and it will go up at least 1%. I am so stressed financially I can cry at the drop of a hat. My parents help me when they can.

    I joined the National Guard, partly to help pay for my student loans but to find out because my mom cosigned on some, they will not help pay them. I am out of NG now. I just don’t know what to do. I have looked into bankruptcy a little bit, but it’s not even that I am trying to get out of paying them. I just need my payment lowered. No matter where I go to I always get shot down and told there is no help. Any advice? help?

    • Hi Marisha,

      It sounds like you need to pursue the bankruptcy option since you’re run out of other avenues.

      There’s no magic bullet here. You borrowed way too much money and are unable to pay it back. The sooner you recognize that’s the problem, the sooner you’ll be able to deal with it, get it resolved, and start living without all this stress.

      Talk to a local bankruptcy attorney, tell them your situation and ask them how to proceed. If you have any chance at passing the undue hardship test, then go for it. Get those loans discharged and move on with your life!

  31. Hello,

    I immigrated legally to the U.S. After going into the service, I attended an “experiential” program in holistic psychology in California. The program led me to over 185,000 in student loans (half of that is in private student loans). The school program was 4 years long and students were offered a degree in counseling psych after the second year. English is my second language, and I’ve been on a challenging situation since finishing the program, and through part of it. I didn’t have a clear understanding of the field I was graduating in. The school also inducted students in what they called and “spiritual emergence” enticing students into experiential courses that often didn’t require significant academic engagement or applications to the mental health system. After about 7 years in the field working as intern, I had to take an extended personal medical leave, and a family leave for around 1 year (total permanent disability for 1 year). I filed a complaint with WASC senior but they wouldn’t process it because of the time it’s passed since I was in the school. I then lost my job, and was unemployed for close to 3 years. I came back to work but with disability (generalized anxiety, complex grief, major depression) accommodations. My wages last year were 17,000 ( unemployment) and my salary now is around 57,000 but it barely gets me by in the bay area, and had to request accommodations because of challenges in it with my condition. My immediate family is in south America, and I wasn’t able to travel home partly due to this. I’m looking at transferring to another job because the work in mental health and with my condition is very challenging. I’d appreciate any advice you can provide.

    • Hi Enrique,

      I would recommend speaking with a local bankruptcy attorney to see if they think you could qualify for a discharge. It sounds like the school that provided your education was quite the scam operation, and you may have a good chance at getting those loans discharged because of it.

      Check out the section on this page called “How Does Private Student Loan Bankruptcy Work?” and look at the three conditions that make it easy to qualify for a discharge. The first and second condition may BOTH apply to your case, making the odds much better that you could get the discharge and never have to pay back the rest of your loans.

      Again though, only a local attorney can advise you in these matters. I am not qualified to offer legal advice, so I can’t steer you in any particular direction, but I would take this to the lawyer and say “Will this work?”.

      Considering you owe so much money ($185,000 is not laughing matter), it would be worth spending $5,000 or even $10,000 with an attorney to get this taken care of.

      Thank you for your service Enrique, and good luck!

  32. Hello, hoping for some advice.

    I have two degrees, both in variations of Urban and Regional Planning. Over the course of both degree programs, I took out loans to pay for the education. Currently, I am sitting with approximately 250k (a good portion of which is interest at this point) and have been unsuccessful in landing a job in my field. In the interim I was able to obtain a few part time jobs to allow myself to survive, and at this point my private loans with Navient (formerly Sallie Mae) are on the brink of being sent to a lawyer. The best repayment they could offer was 1% of my interest…and unfortunately due to my minimum wage jobs…even that payment is too much. I have some other small debts that have also gone into collections since I began graduate school (I did graduate), and while I know I could file Chapter 7 on those, I don’t know if it worth it if atleast some of the student loans could go with it. I was just hoping for some advice. I currently live in Northern California, but my schools were in other states…I don’t know if that matters.

    • Hi Amanda,

      I would recommend speaking to a local bankruptcy attorney about this, and I do think that you should pursue a bankruptcy discharge. Owing a quarter million dollars, and having no income is about as close as I can imagine to qualifying for one of the undue hardship tests.

  33. I have $75,000 in Federal loans (who I haven’t paid on as I just graduated with my Masters), and I have $60,000 in private loans, which I have been paying $450 on for 5 years (they don’t allow any deferment or forbearance). My federal loans are about to enter re-payment and I do not have money to pay for BOTH loans, rent, car, electric (I do not have cable or internet), and all my other bills when this occurs. I currently make $13.50 an hour, and my bills are larger than my income. However, I recently was offered a new job, and within a few months I will make :40,000 per year (before taxes, medical coverage, retirement, etc). With that pay incease, I cannot afford an addition payment on top of my $450. projected payments over $600. That’s $1100 per month. Is there anything I can do. I will not be able to support myself, yet alone have a family one day.

    • Hi Heather,

      Did you use the Federal Government’s payment estimator and factor one of the income-based repayment plans into determining what your monthly payment would be?

      It sounds like you borrowed way too much money to get your degree. I hate to be the bearer of bad news, but you should have only taken out as much as you expected your first year’s annual income to be, and you borrowed more than three times that amount.

      It’s not going to be easy to pay off this debt. I would speak with a local attorney and see if they think you could qualify for a bankruptcy discharge BEFORE you start earning $40,000 per year.

      Based on your salary of just $13.50 per hour, you may be able to make the case that you literally cannot afford food, shelter and clothing because of your private monthly payments.

      I wish I had better news for you, but only an attorney can give you solid advice at this point. Don’t give up though – you have a shot at getting out of this debt, and you will eventually if you create and stick to an appropriate budget.

      Remember, pursue a bankruptcy discharge on the private debt, and get onto an income-based repayment plan for the federal debt, then make sure that you take the fastest track toward forgiveness.

      My guess is that in 20-30 years you will be completely out of debt, and this will all seem like a bad dream. Don’t give up!

  34. Hi Tim,
    In 2007-9, at 37, I went back to school to get an MBA for career advancement. I was working full time which required frequent travel, so I chose an online program at an accredited university. However the program was new and unique enough that it was not eligible for Federal student loans. In 2008 I was laid off, and decided to take private loans to finish up, assuming I was making a good investment.
    Between then and now, I graduated, took a job just to be working, had a nervous breakdown meriting hospitalization, lost my Dad, lost my Mother-in-law (three weeks apart), got laid off from a job that actually used my MBA, and my husband was laid off and took a lower paying job. I now suffer from panic attacks, anxiety and severe depression. I don’t want to go on mental health disability because I can work as freelancer, and I want to, but my doctors think I’m not able to work at the level I once did. Our HHI went from $123k/year to $52k/year.
    My husband and I are prepping, with the help of our attorney, to file Chapter 7 bankruptcy. Based on what I’ve researched, my $50k in student loans should be eligible to be partially or fully discharged because of it’s Federal status during the time I attended (coincidentally, the online program is now eligible for Federal loans).
    I’m looking for more information to bolster the position my particular loans could be discharged or partially forgiven based on the program’s Federal status at the time I attended. Any thoughts or guidance of where to look or how to think about it is greatly appreciated!

    • Hi MDZ,

      Sorry to hear about the mess you’re facing. I have two ideas for you to look into:

      1. The Total and Permanent Disability Discharge Program, which you’ll find here. If you were to gain total and permanent disability status, you would be able to discharge at least your Federal student loans. I know you don’t want to go on disability, but I would look into this program just to make sure it’s not a better option than what you’re currently considering.

      2. The False Certification of Student Eligibility Discharge Program, which you’ll find here. This one is a little tricky, but look into the details, and perhaps you’ll be able to qualify for a discharge because: “The school certified your eligibility, but because of a physical or mental condition, age, criminal record, or other reason you are disqualified from employment in the occupation in which you were being trained.”

      I would definitely recommend that you and your husband speak to a lawyer about your chances of receiving the Bankruptcy discharge though. If you two are making $52,000 per year, that is probably going to make you ineligible for a discharge.

      Remember, qualifying for the bankruptcy discharge requires having your life literally endangered by facing too much student loan debt, as in, you can’t afford food, shelter and clothing because of all the money that is being funneled toward your debt.

      Be very, very careful about pursuing the bankruptcy filing, because it may not actually help. A local attorney will be your best bet toward determining the proper course of action here.

  35. I am currently being sued on $190k in private student loans. My husband makes $36k/yr and I am unemployed due to to costs of daycare for 3 young children negating any salary I would be qualified to make. In 2010 we declared bankruptcy, as the business we ran together went under and we were making less than $600 a month doing odd jobs. It was a no asset ch7 and was discharged later that same year. Now they are suing in court, and if they win a judgment the garnishment will make it impossible for us to meet our basic needs. I have heard about reopening a bankruptcy to file an adversary proceeding, but have not been able to track down much information on the process involved. I know there is always a possibility, but I wonder if undue hardship would be fairly easy to prove in our case? I am trying to settle with them now, but they are still throwing out such large numbers that we would actually be better off financially to let them garnish.

    • Hi There,

      I would definitely speak with a local attorney who has bankruptcy experience, and ideally experience with student loan bankruptcy, before proceeding here. I would not settle and would try to get this discharged entirely.

      It sounds like your lender wants to be total jerks about the situation. Remember though, whoever is working your account on their end is probably being paid a commission, so the more they take from you, the more they make.

      These people aren’t necessarily evil, but they are out for their own self-interest. Keep that in mind, do not get frustrated and accept a bad deal, and spend a little money on a good lawyer because they could be your ticket to becoming debt-free.

  36. I am a graphic designer. I attended the art institutes from 2010-2013 and got my bachelors. Have 5 loans 4 of which are private loans. (Was never told private loans are bad by my financial advisor or advised any options to me). I owe over 100,000 dollars. Each loan has 6-12% interest. I have no one to help me consolidate. I wasn’t really able to find a job after I graduated. Eventually I found one where I make less than 18,000 a year after taxes. About 1200 a month. My loans are charging me with 1000 a month. I asked for options to lower my payments but only my 1 federal will. I’m still paying about 1000a month. I live with my bf who pays for the rent, food, and bills with help from his GI bill. I drive his car because I can’t buy one or afford one. I’m not able to help with anything because I can’t afford it. I tried getting a second job but I live in a college town and they only want to hire college students for part time jobs. I got denied by even Walmart. In a couple years when he graduates abs we stop getting his GI bill neither of us are going to be able to afford to live. We are falling through the cracks on every front. And come to find out the school I went to got sued 11 billion while I was there for using tuition for fraud. Labeled themselvesas a private school so they could charge more for tuition. Bribing employees and fudging employment percentages after graduation. I was told by my school that the start off jobs for graphic design were between 45-50k ayear but the only job I was able to find was less than 18k now I’m stuck with no help. I have the portfolio that would get me amazing jobs but they don’t look at that like this school led me to believe. They look at your years of experience. I need help.

    • Hi Rachel,

      It’s time to speak to a lawyer. You’ve got such a low income, and enough debt, that you may be able to qualify for a discharge. You’ll have to spend a few hundred or a couple thousand dollars getting help from an attorney, but it could save you a lifetime of misery.

      I would look into it right away.

    • Robyn W says:


      The same thing happened to me attending the same school and getting the same useless degree. Would love to know what you find out as I’m currently assessing if I have any options.

  37. I am a CPA and consistently come across clients with the most disturbing student loan stories. The worse ones belong to parents and grandparents cosigning for loved ones who end up dropping out and leaving them with the bag. Do you think relief is available for borrowers who are not the students and is age a factor in their favor?

    • Hi Angie,

      I do not think that any assistance will be created for co-signers. My thinking is that the only reason we see so much offered to graduates themselves is that the assumption is people were tricked into making bad decisions before they knew any better (at 17, 18, etc.).

      What does a teenager know about the way the world works, and about how much they should be borrowing to go to school? The student loan debt problem has reached critical mass becasue massive banks, colleges and universities prey on the young, naive minds, promising them the world, and charging them an arm and leg for something that many of these borrowers don’t even need in the first place.

      However, I do think that Congress and the general American public would be far more skeptical of seeing tax dollars spent propping up poor decisions made by parents and grandparents. These are people we should expect to know better, and to avoid signing up for loans that are far too big in the first place, or for kids who shouldn’t have been trusted to take on that much responsibility.

      I haven’t run into much clamoring for change on that front – the numbers don’t lie – if you check comments throughout this site, I’m getting questions almost exclusively from the students/graduates themselves. There’s a handful of co-signers in here too, and yes, I do personally agree that it’s a problem that should be addressed, but I don’t think the political resolve is there to actually get anything done.

  38. Hi, I have a undergrad loan that is 110k now. I made an arrangement with SMS after years of not being able to pay the $700 a month loan Sallie Mae was asking me to pay. This arrangement to pay $200 a month was made about 3 years ago and I paid with no problem because they just took it out of my bank account every month. Unfortunately, the $200 was only paying part of the interest and none of the principal and now SMS sold the loan back to Sallie Mae (now Navient). Now Navient wants $5500 down payment to continue the arrangement and I don’t have that kind of money, they want me to ask my ” friends and family ” and I know they don’t have that kind of money. I’m at a loss, they threaten to sue me and garnish wages if I don’t make some type of arrangement which is horrible because I was paying and showing good faith and now they want a large chunk of money that I don’t have just to keep the arrangement of $200. I don’t know what to do. This is causing me so much stress. I’m back in school and getting my Masters in Social Work and I refused to take any loans because of the trauma this has caused me. I’m paying out of pocket with the help of my union paying for some credits….I’m so distraught.

    • Hi Martine,

      Sounds like Navient is trying to push you around. I’m not sure if it’s legal for them to change the arrangement you had with the previous lender.

      I would consult with a local attorney before agreeing to anything with them. You may not have to agree to go with the new deal they want to force on you.

  39. My debt figures in at around $220,000, all in total, between federal and private.
    Federal loans are currently in deferment, following a recent consolidation.
    Private loans are completely out of control, and I am currently being threatened with default, having been unable to render payments for about 6 months.

    I am an artist and a teacher. Since finishing graduate school in 2007, I have only had one year where I was able to piece together income over $30,000. And, during that time, i was managing to make interest only payments that were sometimes over $550 a month.

    The circumstances have changed drastically. At times, I now bring in just about $1,200 a month, and at last check about $470 a month is being demanded. Which with rent and other basic expenses is simply impossible. Just. Simply. Impossible.

    I have steadily and consistently applied for both full and part-time work. This required leaving some of those part-time duties, but I have since returned. I have interviewed for full time positions, but have not been selected. And, I have put over five years in at my part-time teaching job, but there is no sign of true advancement in the near future. But, even at part-time, and even at low income, it is steady. So, I can’t just walk away completely.

    Is bankruptcy a real option for me?
    I live in Rhode Island, but originally resided in New Jersey at the time that all of these educational loans were taken out?
    And, again, my ONLY debt is educational.
    I don’t have credit cards, I don’t own or lease a car, and I have been uninsured since 2009.

    Do I have any options?
    According to the private loan company I am out of options, other than to just pay up, or have my financial and professional future destroyed.

    • John, I’m going to be blunt with you – you made an absolutely terrible decision borrowing that much money.

      You are not going to find a magic solution to this debt. You borrowed way, WAY too much to become an “artist and teacher”, and you’re going to need to look at filing for bankruptcy to get rid of this debt.

      I just hope that you’ll be able to pass one of the undue hardship tests, because if you can’t do that then you may be absolutely screwed here.

      It’s time to speak to a lawyer. I think you may be able to pass the undue hardship test because you owe so much and make so little. But to the tell you the truth, ONLY a lawyer can give you advice on this, so please make sure you contact someone today.

  40. I’m so stressed. I originally borrowed 45k to attend a fashion school. I never graduated and now i owe 184,000.00 due to putting my loans on forbearance. I didn’t graduate because i had to find a third cosigner and i was not able to. Im stuck in a customer service job making $16 hr or $33,500.00 a year. I have a child and im a single mom. I take home $800 every two weeks. From that i pay my rent $650 a month. I pay daycare 480 month. I pay car payments, car ins, electric bills, phone bill, medical bills. I don’t have extra income to pay the $700 minimum payment that sallie mae wants me to pay. My cosigner is 58 and doesn’t have any extra money to help me. My other cosigner has 3 children and is basically on food stamps and cannot help me. I try to pay sallie may but all i did was get behing on other bills to pay them. I don’t see a way out. The school i went to wasn’t accredited the credits do not transfer i had to start over in a new college but its hard because I can’t stop working because i got a mouth to feed. I don’t get child support. Im alone drowning sometimes i feel my only way out is death. Can someone give me guidence as to what i can do? I can’t consolidate because have bad credit due to the loans, I don’t get food stamps or child care assistance because I don’t make $11 hr.

    • Hi Alma,

      I think you might be able to qualify for a bankruptcy discharge, since you owe so much money and are making so little. I would consult with a local attorney for advice on how best to proceed, but your story is basically the exact scenario that bankruptcy discharges were created to help with.

      Don’t give up! Call a couple attorneys today to tell them your story and see what they think. Just give the basic facts:

      1. You owe $184,000
      2. You make $33,500 per year
      3. You are a single mom, with one dependent
      4. You have cosigners on the loan, but they can’t help

      That’s all they need to know. They will be able to determine whether or not you have a shot at getting the loan discharged. (Don’t give up if the first one says no chance, because they may be wrong. Contact 2-3 and only stop if they ALL say no, absolutely no chance.)

      Good luck!

  41. Nancy A says:

    I filed bankruptcy in 2011. My private student loan was discharged and approximately 2 months later I received a letter from department of education stating I was denied and I’m fully responsible for my loan. Is that possible for them to deny me after it was discharged? I’m having a difficult time paying them due to financial hardship. …what can I do??

    • Hi Nancy,

      It sounds like maybe there was some confusion – if your private student loan was discharged, then you shouldn’t have received a letter about it from the Department of Education. If you got a letter from DOE, then perhaps you have a Federal student loan that you still owe money on?

      Is it possible that you had both private and public loans, and that only the private loans were discharged? You’ll need to look into it further, but that’s what it sounds like is going on to me.

  42. Melanie says:

    Hello! I was wondering if you think there would be any chance that my husband and I might be able to get some of our student loan debt discharged? I graduated with a BA in Liberal arts and currently gross $28,400 per year. My husband grosses about 24,500 per year but his check is being garnished by his federal student loans. I owe $88,000 in federal loans (they’ve grown ALOT since I first started school in 1997) and about $70,000 in private loans. My husband still owes $18,000 on federal loans and about $55,000-60,000 in private. We have one dependent. Our income tax return is taken every year for the federal loans as well. Unfortunately, we were never able to make any payments on the private loans because once they became due I was not working and he was the only provider for our family. Now they are all defaulted and divided up between multiple collection agencies and we cannot make payment arrangements because they want it all. I am planning to set up a federal loan consolidation for us to get those out of default but I don’t know what to do about the private loans. We can barely make ends meet as it is. Any suggestions?

    • Hi Melanie,

      Sorry to hear about your situation. I don’t want to steer you wrong, but it does sound like you may have a shot at a bankruptcy discharge. Your best bet will be speaking with a local attorney who has experience in the field, and asking them what they think your chances are.

  43. joseph nelson says:


    Looking for advice if i might qualify for private student loan forgiveness. I went to the Art Institute of New England which is a part of EDMC which is being sued by the federal government for defrauding the government and students.

    I went there because audio production wasn’t offered at any accredited universities in my state. I am not in the hole for $55k for a degree that is worthless. Since leaving there six years ago, never been able to find a job in that field.

    The school defrauded me and thousands of others lying about their success rate and overcharging for their program. The quality of education was not worth the outrageous cost.

    I have made more than a good faith effort to pay it all back. I tried consolidating my loans multiple times, both on my own and with a cosigner and didn’t get approved.

    I have made my payments on time for the last few years. Now I am at a point where it’s too much to pay my loans and live reasonably.

    My take home after taxes is about $25k but I pay taxes to two states as I live in CT and work in New York. I can’t afford the cost of commuting, paying my loans and simply living. I have tried to work with my lenders, but they have done nothing to help me.

    • Hi Joseph,

      Only an attorney can give you advice on a legal matter like this. It sounds like you may have a case though. I’d contact a local lawyer and see if they will help you file bankruptcy and pursue the discharge. Good luck!

  44. Hello!

    In a Chapter 7 bankruptcy, when does the adversary proceeding need to be filed? Does it have to be before the 341 meeting?


  45. Where or what website can I find a discharge or litigation bankruptcy attorney for my private student loans by Navient lender in Aliso Viejo, CA or Orange County area?

    • I’d try Google or Yelp. Read reviews of what other people have said about potential attorneys, and call at least 3-5 before deciding who you want to see in person. Treat this like an interview.

  46. Hi Tim,

    My current Student loan debt figures at about $125,000 with about $75,000 of that being private loans. In 2011 after graduating school and getting a degree in Graphic Design I moved to the UK, wife is English, and began working at a design agency. I currently make approximately $33,500. It varies depending on how well the pound is doing compared to the dollar. This also makes paying my loans tricky as I have to pay a fee every time I convert to US dollar. I started paying and have been paying my student loans since graduation. My federal loans have been on an IBR plan and are very easy to manage at $50 a month. My private loans are the tricky ones. They account for almost $700 a month, interest only.

    When it was just my wife and I, the private loan payments weren’t so bad but as our family has grown, 1 child now and one on the way, the finances have gotten tighter and tighter and it’s not becoming a bit difficult to afford and maintain a decent standard of living. I’ve tried to consolidate my private loans but as I’m not living in the US it’s difficult because I have basically no credit there or it’s bad credit because of the student loans. The loan companies are no help in that department so I’ve looked at bankruptcy as a way to organize my private loans. I’m not worried about my credit score as it won’t effect my credit score here in the UK. Any suggestions or advice would be great.

    Thank you.

    • Hi Bryan,

      My best advice for you on this would be to speak with an attorney. You’re straddling international barriers here by living and earning in another country, while trying to wipe out debt from the homefront, and I have absolutely no idea how that will play into things, but I’m sure it’ll be looked at.

      I think you might have a shot, but it sounds like you’re making some decent cash and that may get in the way of a discharge. I honestly just can’t tell you how this will play out because I don’t know what sorts of information the banks here will be able to require you turn over, but I’d definitely talk to an attorney to see if they can sort this out for you.

      Good luck!

  47. Kathryn F. says:


    My husband and I both attended school at Le Cordon Bleu for culinary degrees. Out of the gate after graduation Sallie Mae wanted $800/month from both of us for each of our loans. I was making 9.00/hr at the time, and my then boyfriend was only making 10.00/hr himself. Anyway, we scraped together some payments, and used their various repayment programs to lessen the blow, and still ended up in default. Fast forward 10 years, my loan is somewhere to the tune of $123,000 and his is a similar outrageous number. Our loans have both been sold numerous times to different debt collectors. I recently received a settlement offer of $32,000 for my loans, but alas that would only create another loan for me (assuming anyone would loan).
    Anyway, the problem is, I’ve been at my job for almost 10 years, and worked my way up from the very bottom. I’m now a manager and make more money than could be called “poverty” level. My household generates around 80,000 a year, but our bills are crippling us. I have at least 2 other student loans that we are paying in full. Is there any hope of bankruptcy here? Thanks!

    • Hi Kathryn,

      If you guys aren’t near the poverty line, then there’s probably no hope for having your loans discharged via bankruptcy.

      I’m sorry to be the bearer of bad news, but it’s still pretty difficult to get rid of student loan debt by filing for bankruptcy. If you can’t pass the “undue hardship” test, then there’s no way they’ll let you wipe out the debt.

  48. Hello,

    I have been paying my wife’s student loan payments since 2007 she has never had enough income to make the payments. She went to Embry Riddle and she also took out private loans to pay for multiple pilots licenses. She has been unemployed since Jan 2015. I have paid over 80K and she still owes 86k of the 100k that was borrowed. All but 15k are private loans do we have any options as I make 96k per year but these are definitely becoming a burden.


    • Hi Justin,

      It sounds like you’re making too much money to qualify for a bankruptcy discharge. You’re going to have to speak to a local attorney to get a solid answer though – it really depends on where you live, how the courts are handling these sorts of requests, etc., and I cannot provide legal advice.

  49. Francesca Lo Iacono says:

    I have close to $110,000 in student loans, one federal the rest private. I have called my private loans to see about any help to do any income based repayment options and hald the time they are rude and tell me that I am lucky they have helped me with lower payments for the past few years and my monthly payment will be going up another $200.00 per month in October.

    I only make $34,000 a year and another option my loans have for me is to go back to school, which I find ridiculous considering I can’t afford the loans I have now, let alone adding some more on. I live in New York and I know most lawyers will tell me bankruptcy probably isn’t an option, but is that because they have not done anything with student loan bankruptcy?

    Is there any advice for me or would I possibly qualify to do bankruptcy for my loans?

    • Hi Francesca,

      It sounds like you’re in a pretty tough financial situation here. I would consider going after the bankruptcy discharge, but only after speaking to a local attorney who has experience dealing with student loan debt and debt discharges.

      You make very little money, and you owe a ton, so you may fit the profile for someone who can receive a discharge, and if that were the case, then it would definitely be worth pursuing.

  50. Tonya Brown says:

    Hello Tim,

    I am currently being sued for student loan default from NCT in NYS. My fears are that since I can’t afford an attorney to fight them since I never took out loans with them that they will win and start to garnish my checks. Which I’ve read that you can be fired if it’s more than one. I have several.

    I currently make 38K before taxes. My loans total about 200K. I still can’t get my degree because I owe the school. It’s hard to make more money because most of the jobs that pay more require degrees. During this time I’ve been assisting my mother who is on disability. I have no children and my health is fine. I pay rent and also have credit card debt. By then end of each pay check I have very little left. I have no savings and no assest.

    I know I need to see an attorney but wanted to get your opinion on this.

    • Hi Tonya,

      I think you have a good shot at getting a bankruptcy discharge since you’ve got so much debt, and are making so little money. I would speak with a local bankruptcy attorney to get their advice on how best to proceed.

      Also – if you’re being sued, then you probably do need a lawyer anyway. Find someone who can handle both of these issues at the same time to reduce the amount of money this will cost you.

  51. Chris Burns says:

    I made really bad choices 2003-2007 by taking out private loans. I decided to go back to school full-time and then attend an Ivy League school for grad school. My total private loan balance was originally @ $75k. Since graduating school in 2008, I’ve been unemployed, got a divorce, and ended up with additional credit card debt.

    My ex-husband is cosigned on 2 of the 4 private loans I have. He pays on those because if I default it affects his credit. However, he initially only agreed to help me for 2 years when divorced and it’s now been 5. I still can’t afford to pay that portion of the loan. My total payments a month would be @ $700 (@ 30% of my income).

    I had to put my federal loans in forbearance because they wouldn’t work with me on decreasing the payment amount. They also don’t take private student loan debt into consideration so their Income Based Repayment plan is still too high for me. In any case, the original loans totaled @ $75k, we’ve paid out $47,900 in principal and interest payments, the balance is now $81K. I don’t know what to do.

    I probably wouldn’t qualify for bankruptcy given what you said. My gross income came to $39k last year. I have no dependents. My credit card debt is in consolidation. If I made more than that, my IBR with federal would just go up. I don’t know what it is I want you to tell me, but I’m feeling a bit desperate. I live paycheck to paycheck. I work 2 jobs and if my ex wasn’t paying a huge chunk of the private loans, I don’t know what I would do–default. I’m trying to do the right thing.

    If I were to default on either private or federal, would they garnish my wages? Or if I paid only the ones he’s paying on now, and defaulted on the others, would they garnish my wages for those? I just don’t understand how it is we’ve paid out almost 2/3 of what we originally owed and yet owe more than we originally borrowed? I’m at a loss and can’t breathe. According to the final payment due dates, I’ll be almost 60. Any thoughts?

    • Hi Chris,

      You’re in a tough spot and I don’t have any really good advice or news for you, unfortunately, because student loan debt is ridiculously difficult to get rid of once it’s been accumulated.

      The reason you still owe so much is because of the way that compound interest works – you’ve been paying off less than the interest accumulation each month, so your debt has been growing, rather than shrinking. This is the most dangerous aspect to borrowing money, and one that people don’t think enough about before taking the plunge into inescapable debt.

      If I were you, I would still attempt consulting with an attorney to see if you could have your debt discharged via bankruptcy. Even if you could get rid of only the Federal debt, or the Private debt, that would still be a major victory. It’s unlikely that this is going to work, but why wouldn’t you at least explore the opportunity just in case?

      To answer some of your questions – they might garnish wages if you defaulted and ignored them, but they might just forget about it and write your debt off too. I’ve heard from many people who simply stopped paying and never experienced anything other than a big hit on their credit report. You’ll need to speak with an attorney about this though, as I’m not legally able to give advice on the matter.

      Good luck, I’ll keep my fingers crossed for you!

  52. I have around $120M in student loan debt, some federal, mostly private. My degree is in criminology and I have never been able to find work in that field. I have had ten jobs since 2006. Some of which were second jobs waiting tables at night to try and make ends meet. I married right after college and my spouse had not graduated college and could not hold down a job. I was forced to file a chapter 13 BK in 2011 when my spouse lost yet another job. I was the primary source of income for our family throughout the marriage. I then supported my spouse while he attended college. Once he graduated, we divorced (2013). I have been laid off twice since filing my BK, but have still made all payments on time. Last October, my ex-husband was killed in a car accident. I am now raising our 8 year old son alone. I have been able to keep my BK payments current, I have a credit score over 700, and I was able to purchase a home last year, all while in my Chapter 13. Due to the tragic loss of my former spouse and father of my child, I have had some issues with my employer. I was fired from my job this week and told that my employer would contest my unemployment benefits. I only have 8 months left in my payment plan. I would like to request a hardship discharge from the plan that would include all student loans. My son is obviously having difficulty with the loss of his dad and will call me crying from school asking to be picked up early. I am having difficulty finding work that will allow me the availability I need as a mother. Do you think I will have any success getting a hardship discharge for the BK and student loans? Also, my father is a co-signor. How will this affect his credit?

    thank you,

    • Hi Brandi,

      I’m sorry to hear about the situation you’re facing – it sounds extremely stressful!

      I would speak with a local bankruptcy attorney before determining how to proceed here. I would like to say “Yes” to your question, but I don’t want to steer you the wrong direction. This is an important decision with far-reaching financial/legal consequences, so you will need to make it wisely.

      Wish I could be of more assistance, but I don’t want to cause more difficulty for you.

  53. I have 2 private student loan that equal to 85,000. I was told that each day loan 1 intreste rate is $4.60 & loan 2 is $5.40 a day! I tried setting up a payment plan with the third party and they told me if I were to pay $300 a month, I’m not even touching the principle. They just want there money. They told me it was possible for them to lower it to 35,000 if I could pay it in full, but I don’t have that kind of money. I am a wife and mother of 2. I make about $21,000 a year. My mom was my cosigner but unfortunately she is not able to help? Is it possible to file for Chapter 7 and these loans get discharged?

    • Hi Lauren,

      Based on your income, your debt, and your family size, I think you would have a very good chance of getting your loans discharged, but you will need to speak with a local attorney to find out for sure.

  54. Hello Tim,

    Unfortunately I made some bad decisions in regards to student loans, and racked up 130k in private debt. Currently I work for a federally chartered NPO making 46k a year. The monthly payments exceed 1,600 a month not leaving much for living expenses. My job search has been exhaustive to say the least. I’ve applied to over 10k job since my graduation in 2012 with a BS in accounting. I’ve worked out a payment arrangement with my lendors but at this rate the loans will never be paid off. How do my options look

    • Hi Steven,

      To give you the honest truth, your options don’t look very good.

      Private student loan debt is notoriously difficult to get discharged, and if you’re making nearly $50,000 per year, I would have trouble thinking any court will side with you in allowing you to wipe that loan out.

      However, if I were you, I’d still consult with an attorney and see if he or she thinks there’s anything that can be done here. It’s always worth getting an opinion (or even two or three opinions), because you never know what you might find.

  55. Hi, i work for a school that is for getting your CDL lis for truck driving and the company does all the financing in house which would be considered a private student loan I believe is that right?

    Anyway, I need to know for one can a student file us as a creditor in their BK 7?

    For two, if they did not include us in their, can I continue civil suit against them while they are in the process of their BK 7 or do I have to wait?

    From what I have been reading it loks like you can not file Bankruptcy on any federal student loan or private student loan? do you know if there is a Law which I can look at for that?

    Thank you so much

  56. Good Afternoon,

    First I’d like to thank you and those who work with you for maintaining such a thorough place for information regarding Student Loan Debt.

    My story is similar to most: took out a ton of debt for college, I currently have around 23k federal that is current and on an IBR, 50k worth of private student loans, and around 14k in credit card debts.

    Around 2 years ago I was unemployed for the 3rd time since graduating college and had already exhausted all of my forbearance with the private loans.

    After researching for weeks using sites like this, I determined that the best solution for me would be to strategically default on everything at once and prepare to file bankruptcy.

    Well I had been holding out hope based on rumors that the requirements for discharging private student loans would relax and I see that they have but I’m not quite sure I have enough to successfully pass the brunner test.

    I’ve been perpetually unemployed or under employed but am now working and making 35k base with 4k in bonuses. I still live paycheck to paycheck but atleast now I’m not having rolling panic attacks when all of my bills are due. Prior to my strategic default I was making minimum payments on 7 different lines of credit (some loans some credit cards).

    Now I am being sued by citibank for a credit card I defaulted on and I want to determine my best course of action.

    My main question for you is your thoughts on what would happen if I were to file bankruptcy now, have an adversarial proceeding and get denied, and then within the next few years the laws change regarding bankruptcy and private student loans. Is there any precedent to re-opening a bankruptcy case due to a change in the law?

    This entire experience has forced me to essentially live off the grid credit wise for the next decade and I’m completely fine with that, I never want to owe anyone money again, however I want to make sure I plan my next steps accordingly.

    In my research I have gained the confidence that I believe I could file for chapter 7 and make it through an adversarial proceeding on my own, I believe absent representation could also go a long way in satisfying the undue hardship requirement. I feel as though all of the information necessary is available to me on the internet and with enough time and thorough preparation I could navigate the process pro se.

    Any thoughts or guidance you may have after this long winded story would be much appreciated. I’m still looking for attorneys in my area to perhaps offer a free consultation, but I would feel guilty abusing a free consultation knowing that I’m aiming to navigate this process on my own.

    Thank You!

    • Hi Charles,

      I think you’re going to need to speak to an attorney about your situation. I think you’ve done a good job researching your options, and that you pretty much have things figured out for yourself, but I wouldn’t risk your financial future without consulting with a local expert.

      Student loan law and bankruptcy laws vary by state, and get enforced differently in different regions within states (sometimes varying wildly from judge to judge), so I don’t want to give you bad advice and put you into an even worse situation than you’re already facing.

      My advice is to consult with a local attorney, find out what they think will happen with bankruptcy and student loan laws, then determine how to proceed according to their analysis.

      If I were to guess, I would speculate that the laws will be relaxed and that we’ll likely see MORE student loan forgiveness and MORE leniency in the future, but there’s no way of knowing for sure.

      I hope you’re able to find a workable solution here because you’re definitely in a sticky situation, but think you’re doing a good job of sorting this out and you just need to get some advice from a lawyer before determining how to proceed.

      Don’t worry about “abusing a free consultation”. That’d be a foolish reason to make a huge mistake which could literally ruin your financial future.

  57. I am a 61 year old former student. I exhausted my federal student loans, so I had to get Sallie Mae private loans (smart loans). My wife and I raised 7 children, and now the children are grown. Inspired by president Obama, I decided to continue my education.

    Sallie Mae offered me what they call “a smart loan” I believed that since this was Sallie Mae that they would work with me in paying back my student loans. I later discovered that Sallie Mae doesn’t work with students like they did with the federally backed loans.

    Both my wife and I are on social security disability, and with a house note of $589.00 a month, and private student loans totaling $554.00. My SSDI check is for $1377.00 and my wife (co-signer on my smart loan) is $840.00. I have only two options; file chapter 7 bankruptcy or use a reverse mortgage.
    Student loans cannot be discharged in bankruptcy, so a reverse mortgage is my only option.

    Sallie Mae is adamant that they do not work with students with their student loans (unless you default). I am sorry that I was inspired to finish my education. We are constantly told to get an education, and I truly believed that this was a noble goal.

    The reality is that federal student loans are good, because they will work with you based on your income, but Sallie Mae smart loans do not care what your situation is. My co-signer on my smart loan is also on SSDI.

    Do you have any suggestions? The reverse mortgage company told me that I would not get any funds for a reverse mortgage because of my credit history. I have nowhere else to turn. Any suggestions?

    • Hi Prince,

      Sorry to hear about your situation. I don’t have any great advice for you on this because Private Student Loan Debt is notoriously difficult to deal with, except that I will say that it’s not true you can’t get it discharged in bankruptcy.

      Have you spoken to a local bankruptcy attorney? It’s definitely possible to get private student loan debt discharged, though it’s not an easy process.

      I would start with that and see if you can find a lawyer who’s experienced in this, and confident in taking on your case.

      As a last ditch effort, why not simply refuse to pay Sallie Mae? What are they going to do? Garnish your Social Security checks? Would they be taking more or less from those checks than they want you to pay each month? It may make sense to do a strategic default here.

      Please speak with an attorney before determining how to proceed, and good luck.

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