Tag Archives: student loan

Student Loan Borrowers – Watch Out for Harassing Debt Collectors!

We have all heard that student loan debt is a huge problem facing our nation. Students are graduating from college with thousands of dollars in student loan debt and then they struggle to find a decent paying job in their chosen field. To add salt in this wound, the graduates are also being harassed by debt collectors.

Defense Against Debt Collection Brevard County

Defense Against Debt Collection Brevard County

The debt collection industry is increasingly focusing on student loan debt. Not only is the mortgage crisis coming to an end which is slowing down the collection efforts on those types of loans, but student loans are difficult to discharge in a personal bankruptcy filing. In order to eliminate your student loan debt in a Chapter 7 or Chapter 13 case, you must prove an “undue hardship,” which is a tough standard to meet. As a result, the debt collection agents understand that there is no real option for a student loan borrower to obtain relief from their harassing and abusive tactics.

The government has made some small strides in deterring abusive conduct by student loan debt collectors, but it is obvious that more extensive efforts are necessary. For instance, it is time for the burden placed on students attempting to discharge their student loan debt in a bankruptcy filing to be lowered.

While there is not a simple answer for graduates who are facing an overwhelming amount of student loans, if you are being harassed by debt collectors, let us help. We can look to see if a debt collector is violating your rights under the law in its collection efforts. If so, we may be able to file a lawsuit against the collector seeking a monetary judgment. Additionally, while you may not qualify to discharge your student loans in bankruptcy, filing a case can still provide you relief. Not only will the automatic stay prevent further collection efforts against you, but you may also be able to create a more manageable repayment plan under Chapter 13.

Contact Faro & Crowder, PA to learn about filing for Bankruptcy Protection

If you have questions about filing for bankruptcy protection or how to handle aggressive debt collectors, we have the answers. Call us today to schedule your initial consultation. Our office is located in Melbourne, but we proudly serve individuals and businesses across the State of Florida.

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Discharging Student Loans in Bankruptcy

Discharging SL pic

You have probably heard that it is impossible to discharge your student loans in a bankruptcy filing. This is not true – it is difficult, but not impossible. Pursuant to Section 523(a)(8) of the Bankruptcy Code, student loans will not be discharged unless repaying them constitutes an “undue hardship” on the debtor or the dependents of the debtor. Also, it is important to understand that there is not a time limitation for when you must attempt to discharge your student loans. In other words, if your financial situation changes over time, you can still seek to discharge the debt.

The undue hardship standard is strictly applied by the court. There are a variety of definitions out there, but generally undue hardship means that it is not reasonable to expect that you will ever have the ability to repay the student loan. Of course, there is always some amount of undue hardship in repaying a student loan, so usually only severe cases will meet the undue hardship standard.

One bankruptcy case that has provided many student loan borrowers with a glimmer of hope was an appeal before the U.S. 9th Circuit Court of Appeals. The debtor, Michael Hedlund, was allowed to discharge $58,000 of his $85,000 student loan. The reason his case is significant is that Mr. Hedlund was a middle-wage earner, not somebody facing extreme poverty.

If you believe you can meet the undue hardship test to discharge your student loan or you are overwhelmed by a variety of different debts, let us help. We can review all of your finances and help you understand your debt relief options. Call us today to schedule your initial consultation. Our office is located in Melbourne, but we proudly serve individuals and businesses across the State of Florida.

What Will Happen to My Student Loans in Bankruptcy?

Discharging student loans in a personal bankruptcy case can be difficult. The debtor must establish an “undue hardship,” which is a tough standard to meet. If you are unable to show an undue hardship, what happens to your student loans in your bankruptcy case? The answer depends on your finances, the type of bankruptcy you filed and the kind of student loans you have.

Student Loans in Bankruptcy | Melbourne, Florida

Federal Student Loans

As soon as you file your petition, all collection activity on your federal student loans must cease. In other words, you will no longer receive a monthly statement, receive collection calls, or any other notices that your payment is due. In a Chapter 7, you will receive a four to six month reprieve from making your student loan payments. In a Chapter 13, you can obtain up to five years relief from making your full payments. Additionally, in a Chapter 13 your co-debtor is protected from collection activity while your case is pending.

While bankruptcy provides you relief from being required to make your student loan payments, it is imperative to remember that interest on your federal loans will continue to accrue. Thus, if you do not make your payments while your bankruptcy is pending, the interest will accrue and leave you with a much larger amount to repay when your bankruptcy is over. Additionally, if you have been rehabilitating your defaulted federal loan, you must start over when you emerge from bankruptcy.

Private Student Loans

Private student loans are governed by the terms and conditions set forth in the promissory note you signed in favor of your lender. Many private loans have a provision that a bankruptcy filing by the borrower is considered a default on the loan. Of course, for many student loan borrowers, their loan was in default prior to seeking bankruptcy protection, so the provision doesn’t come into play. However, if your loan is not in default before you file bankruptcy and you have a co-signor, your filing being considered a default could negatively affect your co-signor.

If you have student loans and you are considering filing a Chapter 7 or Chapter 13 case, it is important to confer with a seasoned bankruptcy lawyer. To learn more about how Faro & Crowder, PA can assist you, contact us for a free consultation.

Contact a Brevard County Bankruptcy Attorney at Faro & Crowder, PA

If you are interested in learning more about how a bankruptcy filing will impact your debt, contact Faro Crowder, PA to schedule an appointment. We are located in Melbourne, Florida on Sarno Road and serve residents and businesses of the Space Coast and Brevard County.

Services Areas

We provide services throughout Central Florida including: Melbourne, Titusville, Palm Bay, Merritt Island, Cocoa, Cocoa Beach, Satellite Beach, West Melbourne, Cape Canaveral, Viera and Eau Gallie.

Get In Touch with Faro & Crowder, PA

Faro & Crowder, PA
Phone: 321-784-8158
1801 N. Sarno Road, Suite 01
Melbourne, FL 32935
Email: info@farolaw.com

The information on this blog or any blog is not intended as, and should not be taken as, legal advice.

Student Loan Debt – Who Can Afford a Mortgage Too?

Student loan debt

Our nation is facing an overwhelming amount of student loan debt – estimated to be approximately $1 trillion – and it is having a serious impact on the economy. While several markets are being affected, the housing market is feeling it the most. Recent college graduates, formerly one of the largest sources of new home buyers, are no longer rushing out to buy a house because they cannot afford a mortgage payment in addition to their student loan payment.

A study by the Cambridge Consumer Credit Index reveals that three-quarters of Americans with outstanding student loans say that their debt is large enough that it prohibits them from making major purchases. Not only is the amount of debt prohibitive, any student borrowers who fall behind on their loan payments face difficulty in obtaining credit, including mortgage loans and vehicle loans.

Economists have been predicting that the student loan debt load would negatively impact the economy nationwide. When it comes to mortgages, the credit standards for qualifying for a home loan were heightened in 2008. As a result, we are now seeing that first-time homebuyers between the ages of 25 and 34 are the smallest group of purchasers in the housing market in more than a decade.

If you are facing burdensome student loan debt, you have likely heard that it can be difficult (but not impossible!) to discharge this type of debt in a personal bankruptcy filing. However, that doesn’t mean that an individual Chapter 7, 11 or 13 case couldn’t help you manage your student loan payments. Whether you benefit from discharging other forms of debt or by reducing your monthly payment while your bankruptcy is pending, there are ways a bankruptcy could help.

We will write more on this topic in future blogs, but in the meantime, if you have questions regarding how a personal bankruptcy may provide you with assistance in managing your student loan debt, contact us for a free consultation.

Are Student Loans Dischargeable in Bankruptcy?

Student loans are very difficult, but not impossible, to discharge in bankruptcy.

Prior to the 2005 bankruptcy reforms, student loans were segregated into two classes: private loans and federally-guaranteed loans. Private loans, mostly loans obtained to attend a private technical school or career-training school, were generally dischargeable in a Chapter 7 bankruptcy at any time. Federally-guaranteed loans could also be discharged in a Chapter 7, after the loan had been in repayment for seven years.


Are Student Loans Dischargeable in Bankruptcy?

Current Law for Student Loans

The law changed and grouped all student loans together, regardless of the source. These loans are still dischargeable in some cases. Most courts apply the Brunner Rule, which requires that:

  • The debtor has made a good-faith effort to repay the loans
  • Repayment would mean that the debtor, or the debtor’s dependents, could not maintain a minimal standard of living
  • The hardship is likely to continue for the entire repayment term

In addition, in 2006, a cash-strapped government raised the wage garnishment amount from 10% to 15% for delinquent student loans, and the Supreme Court recently reaffirmed the notion that government benefits, even Social Security benefits, could be garnished or withheld entirely if there is delinquent student debt.

Student loan debt-buyers also have a number of other weapons that can be used, including the suspension of a professional license or the confiscation of an income-tax return.

The current legal framework has been heavily criticized. Many people fear that many young Americans have accumulated more student debt than they can repay to compensate for skyrocketing tuition costs. Indeed, the U.S. Department of Education called rising student loan debt an “urgent concern [for] policymakers,” citing the fact that the average student graduates with almost $30,000 in debt from student loans alone.

Others point to an apparent inconsistency in the Brunner Rule: if a debtor could not maintain a minimal standard of living, how is it possible to show a good-faith effort to repay the loan?


Hedlund v. The Educational Resources Inst., a Ninth Circuit case, may indicate that the law is changing. Mr. Hedlund borrowed $85,000 to obtain his law degree. After failing the bar exam three times, Mr. Hedlund took a job as a juvenile counsellor and eventually declared bankruptcy. It took ten years of litigation, but Mr. Hedlund finally obtained a partial discharge, based on the fact that he could not repay the student debt he accumulated.

Contact Faro & Crowder, PA Bankruptcy Attorneys in Melbourne, Florida

At Faro and Crowder, we believe that a bankruptcy which leaves a person with an immense student loan bill fails to give the debtor a fresh start. For a free consultation with a Brevard County bankruptcy attorney, contact our office in Melbourne, Florida. We routinely represent clients who are facing collections actions.

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