Bankruptcy of Your Student Loans

Bankruptcy of Your Student Loans

Sunday, February 7, 2016



Last time I asked the question if your student loan debt was driving you crazy.  Because that is where I was at, and I needed a way out from under the insanity.  Today I am going to continue to provide some key steps for those of you who have come to the end of your rope, and are looking for help.  

While I admit I do not have all the answers, I know what has worked for me and yes, I believe the possibility to succeed in stopping the insanity is there!  The real question is are you willing to make the effort - because I will tell you, it is NOT easy, as it is a lot of work and it will require a major chunk of time and yes a few hundred dollars.

As I stressed in the previous article here, you already have the skills required to pursue the elimination of your student loans.  Thinking someone else can do this for you is the wrong idea in my opinion.  If you are already under financial stress and the student loan debt is out of control and you cannot manage to eat and pay the rent because of your student loan, then you are ready!  

When the wolves are at the door, and you have nothing to feed them, 
it is time for defensive action!

Let's begin by discovering some defensive actions.  Education!  Yes, you need education. The best defensive weapon you are going to need to eliminate your student loan is your education.  "But wait... isn't that why I am in this boat?"

When you take the offensive position to eliminate the "debt monster" and you have made the decision to see this through, there can be no retreat.  The weapons you need are out here, and you just need to know where to look.

Re-read last week's post.  I provided some key words and phrases that I used (and continue to research), which give you the tools and allow you to understand the weapons you need in this battle.  Your main strategy for victory is only going to be developed by total preparation and understanding of your enemy.

Remember the creditors who you owe - those smiling folks who once were so nice, and so willing to lend you the money for college? Well those same folks have now become the enemy.  The battle is on and they want to destroy you, your credit, your future, and your life. The battlefield will eventually be in the courtroom and you will be there to make your stand.  And if you think you need an attorney, take caution (or should I say take cover?). I could not afford one, and as some have written you may be better off without one.  I know I was!

I began to prepare for the battle nearly a year ago.

My preparation for the battle began by doing an on-line search for "loan forgiveness".  There was a lot of buzz in the media about Obama's Loan Forgiveness plans.  Something I am totally appalled at, as it does and did nothing but help loan sharks and create more profits for sleazy lobbyists and underhanded politicians!   More on this another day....

OK I am back.  The research I did, led me to find there were millions just like me who were in terrible straits financially and millions who cannot afford their student loans and live a middle class life.  As I continued to investigate the issue, I found that many thousands of people in this predicament had filed for bankruptcy.

This led me to find the bankruptcy rules and procedures that dictate when and what can be included in a bankruptcy.  Student loans cannot be discharged under a Bankruptcy Chapter!

Did you read that?  But when you read further, there is a rule of EXCEPTION!  

The first place to begin is know what governs Bankruptcy.  You need a thorough understanding and knowledge of the history and the current laws of bankruptcy.  If you skip this step you will regret it later and perhaps be outflanked or ambushed?

Bankruptcy is provided under U.S. Law (code) and the starting point is getting to know where that code is found. Try doing a search for Bankruptcy Chapter 7. (There are the other chapters as well, 11, 12, and 13, and I suggest you get to know the differences)

As we are talking about discharging... There are basically two Code sections that affect dischargeability of claims in Chapter 7: section 727 and section 523.  First take a look at section 727. (by the way you can create the symbol § used here by holding down the Alt key while typing on the number pad 0167 - you will need this symbol when you write your case)

Under U.S.C. 11 §727 the lawmakers made certain debts "nondischargeable".  Those include such things as taxes, filing under false pretenses, misrepresentation of facts, fraud, etc,  (here is a full description of §727:

There is an exception clause written into the United States Bankruptcy Code U.S.C. 11 §727. Take the time to read §727 in its entirety.  Note that rule begins with this statement under the subheading a): 
                   (a)The court shall grant the debtor a discharge, unless—

It then describes the "unless".  As you read down the list you eventually will come across a reference to section 523.  It is actually the small letter (b) which is the second main point in §727.
                  (b) Except as provided in section 523 of this title

OK... There it is §523.  Now we need to know what that "Exception" is that §727 is referring us to.  

Section 523 is the non-dischargeability clause for student loans (educational debt).

How about I stop here and go into a full description of what is known in the student loan debt circle as U.S.C. 11 §523 (a)(8) in my next blog?

Meanwhile, why not look at the links I included here?  I would also like to share with you two other great blog sites with helpful information, links and articles that I subscribe to, where I have made friends and have gotten a ton of useful information about dealing with debt and my student loans.

Please leave your comments, and any questions... I appreciate your comments, and I will be happy to try and answer your questions. 

Until next time... yours truly, Bob

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