Student Loans & Bankruptcy

Paul, My son, who is 22 years old and a college student that is getting ready to go to grad school this fall out of state, needs to and wants to file chapter 7 bankruptcy on credit card bills and a couple of his private student loans.  We are still investigating the student loans to see if he can include them.  We cannot afford a Bankruptcy Attorney so he is going pro se with my help. 

Here is the question, the two loans he is going to try to include in the BK, his dad cosigned for.  How is this BK going to affect his dad’s credit when my son files BK, or will it?  Is there something my son should do now or his dad do in advance of the BK. 

His Dad will not pay these loans.  He has never given my son a dime.  This is the only thing he has ever done for him financially.  He has not even seen him in 7 years.  What is your advice? 

Thanks so much
Dawn

—————-

Hi Dawn,

The first problem is that student loans are generally not dischargeable per 11 U.S.C. Section 523(a)(8) of the Bankruptcy Code “unless excepting such debt from discharge under this paragraph would impose an undue hardship on the debtor and the debtor’s dependents”.  The courts have adopted what’s known as the Brunner test for determining undue hardship.

The bankruptcy notation should not appear on the non-bankrupt cosigner’s report.  The non-bankrupt cosigner would remain responsible for the debt.

Dawn, most bankruptcy attorneys will provide a free initial consultation and Naca.net has some great consumer lawyers.

Thanks for the questions and hope this helps.

Paul

This author is not an attorney and this information should not be considered legal advice.  Please consult an attorney for legal advice.