student loan and bankruptcy, can it be discharged?
I KNOW federal loans can’t be discharged, but I am talking about a PRIVATE student loan from Sallie Mae (the Tuition Answer Loan) It states on the site that it is not guaranteed by the government at all, etc etc. I was told that as long as the long is not backed by the government (the government didn’t lend you the money..) then you CAN discharge it in bankruptcy. I’m not filing bankruptcy, I just want to know for a future reference. Not that I plan on it, but just in case things went bad and I couldn’t pay it back..I owe Sallie Mae like 40,000 dollars in private loans…
You can’t file bankruptcy on private student loans either. (This is why they are so easy to get… 40K to a kid with NO collateral, NO job, and NO work history? Are they INSANE? No, they just know it’s a sure thing.) In October 2005 Congress passed a law and the below linked article says this about the matter…
But private student loans (ED-can’t be discharged)? There is no good reason that they should be accorded any heightened status, much less the exalted category that competes with criminal fines, child support, taxes, and now federal student loans. How and why did they gain this status in the 2005 bankruptcy bill? No one seems to know. Like one of those earmarks without a known parent, there were no congressional hearings on the idea. There is nothing in the Congressional Record explaining the reasons behind the change.
Shielding private loans from bankruptcy means that repayment demands can essentially extend forever, leaving even the most destitute borrowers with no way out. This makes lenders less cautious about making high-cost private loans to people who may not be able to afford them, as well as to students at schools with low completion and job placement rates. Many of the private loan horror stories we have seen in the media are of exactly that type: high risk, high interest.
