Recently, a woman in California, filed an adversary proceeding in a personal bankruptcy without an attorney and was able to negotiate her approximate $350,000.00 student loan debt down to $7,200.00.
Loe was a 47-year-old woman who had accumulated federal student loan debt with the Department of Education. Loe filed an adversary complaint with the United States Bankruptcy Court for the Central District of California on August 31, 2020. The 182-page Complaint provided a detailed timeline of Loe’s physical and financial struggles of being diagnosed as a Type 1 Diabetic, while her continued attempt to better her financial status and career through the educational process.
Unfortunately, after the long process of obtaining a master’s degree in film and television in December of 2018, she was only able to obtain entry-level temp jobs on film and television sets, while working part-time at coffee shops and driving for Postmates. Moreover, prior to her bankruptcy filing, Loe had racked up extensive credit card debt and exhausted the various options for repayment assistance on her loans, including income-driven repayment plans and temporary forbearances.
When the Covid-19 pandemic hit, Loe lost her job and she had to stop delivering food on Postmates due to her health concerns and that was when Loe decided to file for bankruptcy.
Loe Student Loan Bankruptcy Settlement:
On or about August 30, 2021, Loe entered into a written agreement with her federal student loans, whereby she would agree to pay $60.00 monthly, for ten years or until October 1, 2021, and at the end of the terms, if she had remained current on her monthly payments, the remaining debt would be discharged pursuant to her Chapter 7 discharge order. However, pursuant to the agreement, if Loe misses a payment and fails to pay past the 10-day grace period, her entire student loan balance will become due again, with interest.
Also, the language of the settlement agreement make it unclear if she defaults on this agreement if this student loan debt could be discharged in a future bankruptcy.
Why it is Important to Hire a Bankruptcy Lawyer for Student Loan Debt Relief
As someone filing an adversary proceeding to discharge her student loans without an attorney, Loe did very well. However, there are questions as to whether her proceeding had gone forward, given Loe’s long and detailed medical history and enormous student loan debt, whether the Court would have found for a full discharge of her student loan debt.
“For something so important, especially for bankruptcy, it is extremely difficult to get approved, you want to make sure you have an expert on your side,” says Betsy Mayotte, president and founder of the Institute of Student Loan Advisors. This is especially true, when looking at the statistics, adversary proceedings to discharge student loan debt are incredibly low. According to an article in the Duke Law Journal, in 2017, out of the 241,000 people applying for a bankruptcy discharge with student loans, only 447 completed a request to have their loans discharged in their bankruptcy.
We can Help you File a Personal Bankruptcy with Student Loan Debt:
As seen from Loe, you technically do not have to go through an attorney when filing bankruptcy on student loans, but bankruptcy and the student loan process can be an incredibly complex process. It requires determining which type of bankruptcy you’ll file and bringing an adversary proceeding, or filing for the SLM Program. Going through it alone could mean extra time, incorrect filings, and possibly a lost case. We are an experienced bankruptcy law firm who has helped thousands of people in financial distress. We understand that student loans can be overwhelming and daunting and are here to help you through the process. Please contact us or give us a call to schedule a free consultation at 914.472.6202.