QUESTION
If private student loans go into default and are now handled by third party collection agencies, could I file for bankruptcy?
Asked on Oct 07th, 2015 on Bankruptcy - Washington
7 ANSWERS
Derek W. Freeman
Whether you can file for bankruptcy depends on your income, not on the nature of your debts. However, not all debts are dischargeable in a bankruptcy. Some are not dischargeable in a chapter 7 but are dischargeable in a chapter 13. In your case, however, student loans are not dischargeable in either chapter 7 or 13 except in rare circumstances. The fact that your loans have been sold to a collection agency does not change the fact that they were incurred for educational purposes. So they will not be dischargeable except in those rare circumstances I mentioned. You should talk with an attorney to learn more.
Answered on Oct 13th, 2015 at 8:40 PM
Bankruptcy Law Attorney serving Austin, TX
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Law Office of Susan G. Taylor
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That would be a no.
Answered on Oct 13th, 2015 at 8:39 PM
Assuming you otherwise qualify for bankruptcy, you can file for bankruptcy but you may not be eligible to discharge your student loans unless you can meet the Brunner test which I refer to as the wheelchair rule because you nearly have to be confined to a wheelchair to win a suit in bankruptcy to discharge these debts.
Answered on Oct 13th, 2015 at 8:39 PM
Commercial & Bankruptcy Law Attorney serving Powell, OH
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Ronald K. Nims
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Student loans are nondischargeable regardless of whether a collection agency is used.
Answered on Oct 13th, 2015 at 9:11 AM
Bankruptcy Attorney serving Madison, WI
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Richard B. Jacobson & Associates, LLC
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You can file for bankruptcy, but you cannot discharge those debts in all likelihood.
Answered on Oct 13th, 2015 at 2:34 AM
You would not be able to discharge the student loans without going through an adversary proceeding to prove that they are currently an undue hardship and will be for the foreseeable future. This is a mini-trial conducted by the bankruptcy court. There are a few other reasons to discharge them but none appear from the facts stated. The process to discharge them would be the same for any of the other reasons.
Answered on Oct 13th, 2015 at 2:34 AM
Bankruptcy Attorney serving Seattle, WA
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The Law Office of Marc S. Stern
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Difficult to discharge but possible.
Answered on Oct 12th, 2015 at 7:25 PM