Student Loan Adversary Proceeding

[LS430]

Hello,

First I want to say thank you to everyone who has posted here. I have learned a great deal.

I had my chapter 7 discharged 10/12/21. Several months later my attorney filed an adversary proceeding for my student loans. 

Shortly after discharge my credit scores were all in the mid 600's. Once the adversary proceeding was filed they went back into the 500's and it presented on my credit reports as a bankruptcy filed. The student loans were $19,600 and the lender fought the adversary proceeding. They proposed a settlement, we counter offered and they accepted. The outcome was payback $8,000 over 6 years at 0%

The upside is $11,600 less in principal owed and no interest paid. The downside is the adversary proceeding and negotiations took about 6 months and when it was over the proceeding was dismissed which presented as "bankruptcy dismissed" on my credit reports and it also made it look like a second bankruptcy had been filed. Several of my creditors added comments that my accounts were past due and one added the balance back on and called it 30 days late. Of course my scores tanked.

Now, a few weeks later, my scores are back in the mid 600's. I have 2 credit cards from cap 1 that I got one month post discharge and an auto loan I kept which is 50% paid off and reporting. 

It's worth it to try and get your student loans discharged and even if they are not a settlement is likely that will save you money due to the current conditions with student loans.The trade off is it will in many ways delay your rebuild start by a year and creditors will do what they can to falsely present information but in the end it's worth it to save money, at least to me. 

Thanks to everyone who posts here, I have learned a lot and wanted to share my experience as it could be useful for people with student loan debt.

Thank You

[DogwoodLynx]

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@LS430 wrote:

Hello,

First I want to say thank you to everyone who has posted here. I have learned a great deal.

I had my chapter 7 discharged 10/12/21. Several months later my attorney filed an adversary proceeding for my student loans. 

Shortly after discharge my credit scores were all in the mid 600's. Once the adversary proceeding was filed they went back into the 500's and it presented on my credit reports as a bankruptcy filed. The student loans were $19,600 and the lender fought the adversary proceeding. They proposed a settlement, we counter offered and they accepted. The outcome was payback $8,000 over 6 years at 0%

The upside is $11,600 less in principal owed and no interest paid. The downside is the adversary proceeding and negotiations took about 6 months and when it was over the proceeding was dismissed which presented as "bankruptcy dismissed" on my credit reports and it also made it look like a second bankruptcy had been filed. Several of my creditors added comments that my accounts were past due and one added the balance back on and called it 30 days late. Of course my scores tanked.

Now, a few weeks later, my scores are back in the mid 600's. I have 2 credit cards from cap 1 that I got one month post discharge and an auto loan I kept which is 50% paid off and reporting. 

It's worth it to try and get your student loans discharged and even if they are not a settlement is likely that will save you money due to the current conditions with student loans.The trade off is it will in many ways delay your rebuild start by a year and creditors will do what they can to falsely present information but in the end it's worth it to save money, at least to me. 

Thanks to everyone who posts here, I have learned a lot and wanted to share my experience as it could be useful for people with student loan debt.

Thank You

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Thanks for the info. I am still in college so I will probably wait on this (and I am also curious to see what our "wonderful" government does. 

[FireMedic1]

Congrats! Were they private SL's? Nice work.

[LS430]

Thanks. 

Yes, they were private student loans, no doubt. The thing is they were originally government backed loans that had been consolidated with a private lender who made clear that they were a private lender and I would not be eligible for any of the protections associated with government backed loans. 

Of course when I filed the adversary proceeding and they fought it they claimed that because the loans were originally government backed loans that they were not eligible for discharge. So when you need protection under hard conditions, nope, you are not eligible for anything a government loan would be eligible for. But when they need protection from discharge these are government backed loans! Gotta love that corporate double standard.

What it boiled down to was if it went to court it was all up to the judge to decide and it could go either way so the settlement made sense.