Bankruptcy of Your Student Loans

Bankruptcy of Your Student Loans

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


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