QUESTION

When a school loan is discharged in bankruptcy court, can the state come back after 8 years and garnish my check for payment of it?

Asked on May 03rd, 2013 on Bankruptcy - Tennessee
More details to this question:
In 1999 I entered into chapter 13 bankruptcy case. I included the school loan and knew that they had the right to continue the loan when the case was over. The atty told me that if they filed a continuing debt, it would still be due after the case was closed. However, when I looked at the discharge paper, I saw that the loan holder had instead opted to accept the cents on the dollar that my contract had offered to all of my other creditors.
Report Abuse

1 ANSWER

Bankruptcy Attorney serving Burbank, CA
Reviews not shown
3 Awards
I think you have a misunderstanding about student loan dischargeability and how Chapter 13 plans work. In 1999 student loans were only dischargeable if you proved, after a trial, that repaying the loan would constitute an undue hardship.  If you did not file an undue hardship lawsuit and have that adjudicated in your favor, then your student loan debt was not discharged.   That has nothing to do with whether and to what extent the student loan creditor(s) share in the distribution under your plan.  They are entitled to receive the same pro rata share as any other unsecured creditor in that payment class.  But if at the end of your Chapter 13 there is still a balance owing (i.e. you did a less than 100% plan), then you will still owe the student loan agency that amount and they can seek to collect on that after your bankruptcy case is closed. Mark Markus has been practicing exclusively bankruptcy law in California since 1991.  He is a Certified Specialist in Bankruptcy Law by the State Bar of California Board of Legal Specialization,  AV-Rated by martindale.com, and A+ rated by the Better Business Bureau.  
Answered on May 04th, 2013 at 2:06 AM

Report Abuse

Ask a Lawyer

Consumers can use this platform to pose legal questions to real lawyers and receive free insights.

Participating legal professionals get the opportunity to speak directly with people who may need their services, as well as enhance their standing in the Lawyers.com community.

0 out of 150 characters