There’s a way out of crushing student debt
When Uniondale, N.Y. based Natalie Jean-Baptiste graduated from law school with a six-figure student loan debt, it never occurred to her that she wouldn’t be able to pay it back.
But she did indeed become an expert on a very narrow — and extremely important — area of bankruptcy law which can be a true godsend to the thousands of people burdened by student loans they will never be able to both pay off and live a normal life. Her own experience led a path in law, “So much more rewarding than I could ever have imagined,” Natalie told me. “I get to help people drowning with student loan debt.”
And before going further, this column is not advocating cheating legitimate lenders out of their right to be repaid for making a student loan. Rather, recent history is filled with stories of loans which should never have been made for worthless college programs leaving debtors close to homeless.
“One of the biggest misconceptions about student loans is that it is impossible to have these loans discharged in bankruptcy,” she points out.
Prior to 1976, student loans could be discharged in bank- ruptcy easily. But in 1998, Congress significantly modified bankruptcy law to only allow a discharge if repaying student loans created an undue hardship.
In her own experience, “I was a good fit for the undue hardship claim, and there are thousands of people across the country in the same situation as I was.” She summarized the criteria for a finding of undue hardship:
“The Brunner test is used by the most bankruptcy courts, and requires a finding that:
1. You can’t maintain a minimal standard of living for yourself and your dependents and afford the monthly payments.
2. The current circumstances are likely to persist for a significant portion of the payment period.
3. You made a good faith effort to repay the loan by maximizing your income and eliminating unnecessary expenses.
Natalie wants readers to understand this is not a slam dunk. “First, you need to find a bankruptcy attorney who is familiar with the undue hardship rules as many are not.
“It is important to understand that you will be filing for bankruptcy, and, as you are claiming an undue hardship, this will be decided in what is called, ‘An Adversary Proceeding’ in bankruptcy court. This is a real lawsuit, as the creditor wants to be paid and you are trying to demonstrate why the loan should be forgiven.
“You will appear before a judge who will most likely use the Brunner Test to decide if you have an undue hardship.
“If you can prove all three of these elements, you are entitled to a discharge,” but you’ve got a lot of work to do, beginning with conducting discovery.
“Be prepared to provide financial records, tax returns, bank statements showing your financial resources, proof of expenses, housing, utilities, food, etc. You will need to present a detailed picture of your financial life.”
Natalie believes that most people can do this on their own, as she did. “I knew nothing about bankruptcy before teaching myself. There is hope for people who are underwater! The hardship exception works, it really does. The myth that you can’t discharge student loans is a popular misconception. It can be done.”
Her website is well worth the time for anyone facing crushing student loan debt: mystudentloancounselor.com.
Dennis Beaver practices law in Bakersfield and welcomes comments and questions from readers, which may be faxed to 661- 323-7993, or emailed to Lagombeaver1@gmail.com. And be sure to visit dennisbeaver. com.