BK finally discharged - Private Student Loans remain - Atty didn't file Adversary Action

[Jade1]

Filed 2/12/2024

Discharged 3/17/2025 

Objection date 03/10/2025.

Hello everyone. It's been very helpful reading all the advice here while going through the BK process, but now I need advice on how to proceed on my case. The case was dicharged on March 17, 2025. I had anticipated that the case might not be discharged without filing an adversary action, but my attorney advised against filing it, suggesting instead that we "just wait to see if they demand payment and that way we can ding them for violating the discharge injunction." I am unsure what is meant by "violating the discharge injunction," because I thought that the injunction ended upon discharge, but my attorney has not been particularly helpful with other aspects of my case,( such as advising on how to handle our totaled car post-filing or negotiating a second mortgage modification).

But here is my biggest problem: I just received a letter from Sallie Mae Loans stating that my loans were not discharged and that payment will soon be due. My attorney mentioned that challenging this could cost anywhere from $3,000 to five figures?! I am unsure why my attorney was reluctant to file the adversary action in the first place, and I am now wondering if I should seek new legal representation. Although the debts have been discharged, the case remains open according the to paperwork that I received from the court. I am also considering whether I could file the adversary action myself. Given that we are co-signers on the loan, and will be retiring in a few years with an income that barely covers our expenses, we might qualify for hardship. My spouse and I are both over 74 years of age.

Did my attorney give me sound advice, and what steps should I take now? I would greatly appreciate any guidance you can provide on how best to proceed. Thank you for your time and assistance.

[TRC_WA]

I'm not aware of student loan debt being dischargeable.

Mine weren't included in my 13... and shortly after discharge I got a similar letter and resumed payment.  If your attorney told you the loans would be discharged I would say that was poor advice.

[Jade1]

Thanks for the reply. The attorney didn't say whether they would be discharged or not. The loans were included in the Chapter 7, and many people here said that an adversary action must be filed to even get the trustee to consider a hardship discharge. I asked the attorney several times if we could at least submit the adversary action, however, he suggested just wait and see if we hear from them. He said if they ask for repayment after the discharge we would address it then. I contacted him after I received the letter and he said that we can do the adversary action now. But it would be a new charge of north of several thousand dollars. Also, because of our situation in and the loans being private student loans, we have a good chance of getting them discharged. But I might have to retain an attorney who is more versed in doing that. I will update here when I resolve it one way or another.

[indiolatino61]

Student loans are able to be included in a bankruptcy filing, but is it a complex process. As I understand it, you must prove "dire" financial consequences and hardship. In my experience, I have not known anyone to have successfully had their loans discharged. Said loans are not automatically considered for discharge. Under the present guidelines, I believe Perkins, FFEL and private student loans are not covered. This is merely my understanding, since if you research this, there are as many articles stating almost the opposite. No clear cut answers by any means.

As for your attorney's apprehension in filing, I find his lack of transparency disturbing. The best of luck to you.

[Jade1]

Thanks! I have an appointment with an attorney tomorrow so I hope it goes well. I will update here on the ultimate decision once it is finalized.  As I understand it, the "Brunner Test" applies when you file an "Adverse Action" to ask the court for a discharge of student loans. For the Brunner test to be successful you must satisfy these three prongs:

1. You can't provide the basics you and your family need each month, like rent, food, utilities, and car expenses. The court will review your income and expenses.
2. It's doubtful that you'll ever earn more than you're making now. (work you've done in the past, your qualifications, and your education and training).
3. You did your best to pay your student loans. (i.e. have you communicated with the lender, have you made, or attempted to make payments on the loan, etc.

Since I have already filed Chap 7 and had my discharge, the attorney should be able to advise whether or not my disposable income will satisfy rule number one.  As for #2 and #3,  I will wait for her advice, but I am hopeful because my payments are nearly $1000 per month and even with the discharge of the other debt, it will be difficult or impossible to maintain the payments.

[indiolatino61]

Thank you for the Brunner Test explanation. I'm sure not everyone is familiar with these guidelines, which is why I mentioned it is not a simple matter. I hope everything goes positively for you.

[jmcmillan]

You will probably need to find a lawyer who specializes in student loans. I’m not sure if the Brunner test applies to private student loans, but I may be wrong. Regardless, it will probably take a lot of time and money. Could you possibly look into a strategic default?

I really wish I could have fought my private student loans in my bankruptcy, but I had co-signers. So basically, if I was actually successful, the co-signers would be solely responsible for the debt.

I see a lot of discussion about this topic on Reddit, they swear up and down that private student loans can be discharged in Bankruptcy because *one* person was successful a few years ago against Navient. But I haven't heard any other examples of this being true. Again, if you wanted to peruse it and test your luck, you will probably spend a lot of money in attorney fees.  

[isaemm76]

My bk 7 was discharged in August 2024 and my private student loan was discharged, but my federal loans weren't. It was weird because from filing until a couple of months after discharge my federal loans disappeared from my reports. Then the reappeared one random day. 

Obviously that's my unique experience and I'm sure someone will say I'm lying.