Bankruptcy of Your Student Loans

Bankruptcy of Your Student Loans

Sunday, January 31, 2016

Are Your Student Loans Driving You Crazy?


The catch phrase "Stop the Insanity" became a national buzzword in the 1990's when Susan Powter used it to promote her weight loss programs, books, videos, and TV shows.

From Wikipedia I learned that "Powter is author of several books, three of which became New York Times best-sellers in the 1990s. In 2002, she returned to writing with The Politics of Stupid, a stream-of-consciousness, self-published manifesto encouraging women to take control of their brains and bodies from food manufacturers, corrupt governments, and fitness/diet industries."

While Powter's infamous looks (white buzz cut hair) outlandish outfits, and jokes made her famous and may have changed the diet and fitness industry forever, most know her as the late night infomercial gal who's "Stop the Insanity" was a call to action!  Millions of people were made aware that there is a better way to live.  Susan's "Eat, Breath/Move, Think" message remains a common sense approach to wellness.

I admit I have not read any of Powter's books, and I while I "think" I am in pretty good health, I probably could benefit from them; however, I am not here to talk about dieting or fitness.  I am here to talk about Stopping the Insanity of the obese student loan debt that I have and be able to shed some light onto what can be done about the financial burden that so many of us are weighed down with.  

Are you ready to Stop the Insanity?

In past postings I have stated that I will provide information, and links to aid student loan debtors.  Today I will begin that process with a few key bits of information and suggestions along with a link or two to get you started.

Let me begin by saying that if you attended college, you already have the most important piece to be able to deal with your student loan situation.  Simply, you learned to study and do research and find relevant information in order to complete your coursework.  Those skills are lifelong.  We never stop learning - and we should be glad we don't.

When I realized that I was never going to be able to pay off my student loan in my lifetime, (and for sure not at 68 years of age and living on $1,200.00 a month!), I knew I had to do something!  That is when I began to do "my research"

Your finding this blog was probably because you were "looking" for help?  Well reading this then may be one of the steps you took into researching how to get some real help with your student loan debt.  I am going to suggest some other steps you can take.  Here we go!

  1.  Google (yes Google!) Today there is so much information available on everything!
  2.  Key Words and Phrases (Learn the lingo, search by using those relevant subjects)
  3.  When you find a source page listing, open several links (select "new tab")
  4.  With several links opening in new tabs, you can take a look at the information, then  decide if it is worth reading, and if so, adding to your collection of web links.
  5.  Remember if by chance you closed a page that you wanted to look at, it can be found  in the history tab.
Let me give you a few key words or phrases...  

Student Loans; Student Loan Discharge; Undue Hardship; Bankruptcy of Student Loans; 11 U.S.C. §523 (a)(8); Student Loan Forgiveness; Student Loan Hardship; Student Loan Crisis; How to Eliminate Your Student Loan; Chapter 7 Bankruptcy; Undue Hardship Tests; 523 (a) (8) Exception; Brunner Test; Totality of Circumstances Test; Johnson Test; Disability and Student Loans; TPD (Total and Permanent Disability); Repayment Plans; ICR; IBR; PAYE; REPAYE (

OK that is a start!  You get the idea... Now use information from one source to find other information and begin to create a database for yourself for further study.

In closing I will give a couple of links to some useful books....

How to Bankrupt Your Student Loans, and other strategies, by Chuck Stewart

Also here is Chuck Stewart's website:

Represent yourself in Court, How to Prepare and Try a Winning Case, , J.D. and , J.D.

Next Time I will provide some help in locating case law and relevant information about what has taken place in the bankruptcy laws regarding the discharge of student loans!  Fun stuff!


Please feel free to comment, I welcome your feedback and would be happy to answer any or all questions.  Sincerely, Bob

Sunday, January 10, 2016


The game of life is hard to play
I'm gonna lose it anyway
The losing card I'll someday lay
so this is all I have to say.... 

                                                                      Suicide is Painless
                                                                       Johnny Mandel, 1970

For those who are new to this blog or perhaps have stumbled upon this site because you are one of the nearly 40 million people who have as USA Today described "monumental student debt", and or perhaps you are one of the 7 Million who find themselves in default on their student loans, well there just may be some tiny light shining in the dark abyss you have found yourself in. 

This blog was begun when I realized that my student debt was drowning me, and the tidal wave of interest had become a Tsunami that was about to take my life!  To say I had reached total despair puts it mildly. Yes, I contemplated ending my life, because I had at one point become homeless, and couch surfing between folks who really wanted me to be someplace else, well ... that certainly was disheartening.

You see I live on about $1,200.00 a month.  I am 67 years old, and on Social Security and I have a small retirement annuity.  I had gone back to college at 40, trying to earn a degree and be more employable; and I had the dream that I could raise my standard of living to provide for 3 children from one failed marriage and a new baby from another marriage.

Over the course of many horrific events in my adult life, nothing and I mean nothing, went according to the dreams of success and happiness I had envisioned.   In retrospect, I made many mistakes. Perhaps one of the biggest mistakes was believing having a degree was the answer?

So where was I?  Oh yes, letting you know there may be some help if you are in a Tsunami like I am!

As you may have read, I recently filed my 3rd Chapter 7 Bankruptcy.  How embarrassing is that?  I once again found myself with a few thousand dollars of debt I cannot afford to pay-off.  Those few bills for medical bills and other unsecured debt, paled to compare to the debt I owe for my student loans, which are now over 27 years old.  

I signed for about $55,000.00 in student loans and for that money I will say I got a good education earning both a Bachelor's and a Master's in Health Administration.  I was an excellent student and graduated with a 3.79 for the Bachelor's and a 3.6 for the Master's.  All while working and raising a family, with a wife who also was in grad school earning her Master's in Health Education.

Both my wife and I were under the impression that the Clinton administration was going to create millions of new health care jobs.  Well, that never happened.      

Defaulting Adds to the Total Debt!

Long story short, I am here today after paying nearly $18,000.00 on my loans, and that original $55K debt is now claimed to be close to $130,000.00 and growing.  That is what default will do to you!

When you default on a student loan, the lender is entitled to demand huge penalties be placed against the loan.  And in my case, I was disabled and living on SSDI (Social Security Disability).  On SSDI, my loans were classified as deferred.  I was unable to work at anything substantial and unable to pay on the loans during this period.  However once I turned retirement age, the Social Security Administration switched me from SSDI to "regular" Social Security status, and whammy I was then off of deferment and hit with the full force of my student loan complete with accrued interest, and penalties.

So why am I telling you all of this?  Well, simply because there was no way out for me.  And really suicide was not something I really wanted.  Oh and by the way... the lyrics were written by 14-year old Mike Altman and the hit song "Suicide is Painless" scored by Johnny Mandel became the theme song for the blockbuster Movie and TV series hit M.A.S.H.

And just when I thought things could not get worse, both my Social Security and retirement annuities began to be "garnished" to pay the interest on my defaulted student loan.  The Dept. of Education can and does take a big percent of your retirement by way of what is called a "Treasury Offset".  In my case it is close to $300.00 a month! (By the way, over 150,000 elderly folks on Social Security are being garnished for student loan debts).

The offsets have been going on since about 2010.  The ridiculous part is that the offset each month does not even cover the interest on the nearly $130,000.00 that the Dept. of Ed. says that I owe.

Loan Forgiveness? 
Not in your lifetime!

My ears perked up with all the talk of "loan forgiveness" those words being spread in the news and on the internet in a barrage of ads and enticements.  All of a sudden everyone was being bombarded with promises of total loan forgiveness.  Well the only thing they really were spreading was a lot of Bullcrap!  These so-called forgiveness options are no more than schemes by loan sharks to get you to agree to RE-FINANCE your student debt! Don't fall for the scam!

Then there is the Dept. of Ed's TPD (Total and Permanent Disability) provision, equating to a loan forgiveness.  But as I have shared before - beware of this trap!  If you apply for a TPD and are granted a Total and Permanent Disability Discharge of your student loan, you will owe the TAX on the total amount "forgiven" as a "capital gain to the IRS.  Gee ... thanks Feds!

Having applied (2) times for the TPD and then learning I would be stuck paying taxes on nearly $130,000.00, I am sure glad they never approved my application, even though I was a recipient of Social Security Disability Payments from 2003 to 2010, and qualified under the rules of TPD!

"Study to Show Thyself Approved"!

After considering all of my options, (including ending my life), I discovered the Undue Hardship Clause.  So I did what any good college student learned to do in school, I researched and studied and applied myself to understanding just what was required to satisfy this so-called Undue Hardship rule that is part of the U.S. Bankruptcy Code. 

If you learned to do research like I did (and unless you partied every day and night) you have the skills required to discover if you qualify for a total tax-free discharge of your student loans.  I will warn you, this process is hard work, and very time consuming and yes at times overwhelming!

It is going on nearly a year now since I began this battle.  In order to meet the criteria of the law, you will have to first file a Chapter in the U.S. Bankruptcy Court of your district.  If you are struggling financially, a bankruptcy may be your way to get a "fresh start", and if there are bills piling up while you are trying to pay off that student loan that is growing faster than weeds in the flower bed, then perhaps you should consider filing.  I recommend avoiding a Chapter 13, because most Chapter 13's still require you to restructure your finances and the loans are included in the restructuring, and thus are not automatically discharged or forgiven in a Chapter 13 Bankruptcy.

With a Chapter 7 filed, you then need to follow up within the same court and file what is called an "Adversary Proceeding".  Like I say... the information is all out there!  The question is are you looking hard enough for the light at the bottom of the abyss?

More later.  Please feel free to comment or ask questions.  

Yours truly, Bob


Friday, January 8, 2016

I have a dream!

Recently during a conversation with a newly acquired friend - who has been a great encouragement to me in my Undue Hardship battle - my friend mentioned that he felt I was part of something big.  He went on to say that the significance of what is happening in the student loan crisis is attune to the struggle in the 1960's, which to those of us who lived in that era, became known as the "Civil Rights Movement".

I remember as a teen, seeing the National News coverage of the events happening in the deep south. And I remember seeing the marchers, the police, and authorities, going head-to head; often with the peaceful marchers taking the brunt of the abuse by the authorities, with blood too often being shed on the streets.

My friend reminded me that it was support from Northern sympathizers who at risk to their own safety and perhaps lives (yes, I recall some did die in the movement), yet those Northern supporters and with them lawyers and right-fighting politicians, eventually prevailed.  It was something BIG!

But it took people to get involved, and stand up against a terrible wrong and a horrible set of laws that had been in place for hundreds of years.  There were several martyrs in that movement, the most remembered is Dr. Martin Luther King, Jr.  His dream speech continues to echo and it rings true that while change did result, there remains much work to do for real freedom from "class discrimination" in America.

Take for example the class discrimination that is taking place in the student loan crisis.  Can one even understand the reasoning behind the treatment of student loan debtors who find themselves unable to pay off loans that continue to accrue interest and that are subject to huge penalties when they enter into default status?

I for one was encouraged to go to college.  Everyone was telling the same story, you cannot get ahead if you do not have a college degree.  The Government made it so easy to get an education; providing loans with just a signature required.  What could be better than that?  No background checks, no collateral, nothing to secure the loan and the veiled promise that a good paying career awaits you.

Well... "I (too) Had A Dream".  My dream was to get a four year degree to earn the same respect and pay as the Engineers had who I worked with within the Army Corps of Engineers.  As a technician in the C.O.E. I watched as young engineers fresh out of college, who knew nothing about the real world of construction, depended on me to show them the ropes.  Then once they figured out they were of a higher class than I was, I learned that they could keep their coveted positions, while I was subject to a "RIF" (reduction in force) once a construction project was completed.

So my "dream" was to earn a college degree, and be able "to stay put", rather than having to move every 2-5 years, as had been my norm.  Moving that often was not a thing a married man with small children should be doing.  In the end, it cost me a marriage and because of a RIF, I moved to keep a job, and in the end became separated from my four children for going on 30 years.

There is a lot more to my life story.  In fact, it has pretty much all come out now.  You see, I filed bankruptcy back on October 13, 2015.  And knowing that the Bankruptcy Court does not allow the discharge of student loan debt, I had spent the previous 9 months educating myself about the Undue Hardship Clause within the bankruptcy code under 11 U.S.C. §523(a)(8).

The Undue Hardship provision is available within any of the Chapters of bankruptcy.  I have seen some people who listed their student loan debt as part of a bankruptcy chapter, thinking that they will receive a discharge of the debts,  only to discover later that the loan is still owed!  In fact, some lawyers even fail to tell you that your student loan cannot be discharged in bankruptcy.  Or worse yet, they tell you that the loans won't be discharged and they cannot help you.

If your situation is bad enough to warrant filing bankruptcy, then you probably have no money for legal fees and you probably cannot afford an attorney.  That is where I found myself.  Living on $1,200.00 a month, my Social Security and my even smaller Civil Service Retirement checks being "garnished" by the Federal Government to pay on the "interest" on my student loan.  My loan was originally about $55,000.00 (I earned both a bachelor's and a master's degree from 1990-1996).

Following graduation and not ever even being interviewed for a job in my field of study, I returned to the C.O.E. for two years as a technician. In spite of my holding a Master's degree, I was still not one of the elite engineers I worked with and for.  I paid off a loan or two (Perkins Loans), and made some payments through various loan servicing agents of the Department of Education.

I became unable to work in 2003, and was awarded SSDI.  When I was on SSDI I was in deferred status.  Unable to make any significant loan payments, the loan was silently growing by way of penalties and accruing interest.  After realizing that the debt was an out-of-control monster, which had reached nearly $125,000.00, I knew I needed some help.

With all the news about so-called "loan forgiveness", I then found and applied for a TPD (Total Disability Provision), that the Dept. of Ed. offers.  In April of 2014, I applied but within a few weeks I was denied.  Not being one to give up easily, I re-applied in April of 2015.  However, the D.O.E. (aka nelnet) never responded.  It was then I decided to file bankruptcy again (I have filed two times previously) and this time, I filed a Chapter 7 and an "Adversary Proceeding" under the Undue Hardship clause.

Following the required meeting with the Trustee in my Chapter 7, I proceeded to finalize and file my "complaint" in the same bankruptcy court under 11 U.S.C. §523(a)(8), "exception to discharge of student loans".

Did you see that word?  Yes it is there... an "exception" which is what you are filing a complaint for.  The process is called an "Adversary Proceeding".  And yes you are going to go up against an Adversary!  Namely the U.S. Department of Education and any of the Loan Servicing Firms you are indebted to.

My case has been filed.  I even have heard from another student loan debtor who is appealing his case to the U.S. Supreme Court.  He called me "out of the blue" and said he had read my case.  You see, I am now in the public eye; as my case has been published via some legal news sites on the web.

My life is now on display via the complaint that I filed on November 27, 2015.  Because in order to "prove" Undue Hardship, you have to tell the court "everything" about your life (more on this another time).  The adversary is not satisfied easily!

My main Adversary is the United States Department of Education, who is represented by the United States Attorney!  Reminds me of the story of David v Goliath!

There is more to come... I hope to post more helpful information for those who are in the same "class" as I am.  Perhaps the only way to defeat the giant is to stand and face it, then bring it down?

Any comments are always welcomed!  God Bless America and the American Dream!  Bob