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My SLs went to Zero Bal. Discharged?

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My SLs went to Zero Bal. Discharged?

I have over $65,000 in student loans and filed Chapter 7. All my balances on my credit report went to 0 and accounts are showing as closed. Does this mean they are discharged? My 431 meeting is next week.

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Re: My SLs went to Zero Bal. Discharged?

Hi there OP and welcome to myFico. I created your own thread on this subject as the one you posted in is over a year and a half old.

 

While you are in BK they will show 0 and if they are guaranteed by the federal government once you are discharged they will reappear with the current balances unless your attorney can get them discharged on a hardship exception.

"If there's a lack of money in your life, understand that feeling worried, envious, jealous, disappointed, discouraged, doubtful or fearful about money can never bring more money to you, because those feelings come from a lack of gratitude for the money you have."

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Message 2 of 7
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Re: My SLs went to Zero Bal. Discharged?

@gdale6 is correct. Just because they are at a zero balance now, doesn't mean at all they were discharged. SL's are rarely discharged. Your attorney has to prove them to be an undue hardship even after the BK, in order for them to be completely discharged, and the trustee would need to have a judges approval as well and sign off.

Also, keep in mind that IF your loans were actually discharged in your BK, you will never be able to get SL's again backed by the government. You will have to get private loans instead.

I would ask your attorney if they were approved to be discharged.

My rebuild worked for me, but won't necessarily work for you!
BK7 D/C- 08/2013
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Re: My SLs went to Zero Bal. Discharged?


@pizza1 wrote:
Also, keep in mind that IF your loans were actually discharged in your BK, you will never be able to get SL's again backed by the government. You will have to get private loans instead.

Need to correct the above. . .   Please see 11 U.S.C. § 525( c ):

 

(1) A governmental unit that operates a student grant or loan program and a person engaged in a business that includes the making of loans guaranteed or insured under a student loan program may not deny a student grant, loan, loan guarantee, or loan insurance to a person that. . . has not paid a debt that is dischargeable in the case under this title. . .

 

(2) In this section, “student loan program” means any program operated under title IV of the Higher Education Act of 1965 or a similar program operated under State or local law.

 

There is no exception  to the above anti-discrimination provision based upon the type of debt that is discharged therefore, should one succeed in proving a hardship and discharge student loans either in part or in full, Section 525 protects that person as it relates to obtaining such loans down the road.

 

Des.

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Re: My SLs went to Zero Bal. Discharged?

Thanks Des, I was under the impression though that any future FSL wouldnt be possible if prior SL's were DC. I was told that actually from my SL proivider prior to filing myself, and actually had a friend who DC prior FSL years ago, and went back to school..applied for FSL again and was denied for that reason!....Interesting...

 

@Sabii , do you have any knowledge on this as well? 


My rebuild worked for me, but won't necessarily work for you!
BK7 D/C- 08/2013
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Re: My SLs went to Zero Bal. Discharged?


@pizza1 wrote:

I was under the impression though that any future FSL wouldnt be possible if prior SL's were DC. I was told that actually from my SL proivider prior to filing myself, and actually had a friend who DC prior FSL years ago, and went back to school..applied for FSL again and was denied for that reason!....Interesting...

 


I think the language of the Statute is quite clear and I would love to take on a case such as your friend's, especially if he/she had something in writing from the lender denying the government backed SL loan because of a bankruptcy.  I see big $$ in that one.

 

Des.

Message 6 of 7
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Valued Contributor

Re: My SLs went to Zero Bal. Discharged?

Hi,
Sorry, I'm unable to provide an answer on this.
My suggestion would be one of two things:
Contact the Dept of Education, since my understanding is that they would be in charge of any adjustments to your account(s). And my second suggestion would be just just to apply to the FAFSA once everything is settled (a few months? Idk bankruptcy at all). It doesn't matter that you're not going to the school, only that in list a community college or something and the results would either let you know the financial aid package you would get if you went there or likely give you a rejection based on the discharged student loan(s). At least it would be a final answer.



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