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Can my very old student loan be forgiven?

1 Answers. Asked on Mar 17th, 2013 on Bankruptcy - New Mexico
More details to this question:
In 1986, I borrowed 2,500.00 (aplus loan.)I paid ont that for ten years(100.00) permonth sometimes more.In 1995 I sold my house, and the abstract company would not release my money until all my debts were paid.They tried cotacting the school to pay off the loan, and could not get them to respond.so they weren't paid .years later ,I got a huge bill. the interest had been changed to 12%.I am 71 years old is there a way to resolve this without having to pay 30,000.00 ? Is there such a thing as agreeing to pay the origial note ,the 2,500.00..I may not live long enuogh.....well I fully intended to pay it but I brok e my hip and fractured a vertabrae.I have almost recovered but i can only work 2 0r 3 hrs.I paid for ten years and have had this loan on deferrrment.I really worry that i may die and they will charge my grown kids for something of a monster i created. Any help will be appreciated.Thank You
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Answered on Mar 17th, 2013 at 5:49 PM

First of all, your children are not liable for your debts.

As far as discharging student loan debts in bankruptcy, you would have to prove that repaying them would constitute an "undue hardship" on you as that term is defined by applicable case law.

In the Ninth Circuit, which includes New Mexico, this requires that you prove:

1. that you cannot maintain, based on current income and expenses, a 'minimal' standard of living for yourself and your dependents if forced to repay the loans; 


2.  that additional circumstances exist indicating that this state of financial affairs is likely to persist for a significant portion of the repayment period of the student loans; and,

3.  that you made good faith effort to repay the loans. 

 

Another option is to file a Chapter 13 bankruptcy case and just pay what you can afford for 5 years; then file another Chapter 13 after that to prevent any collections actions by the student loan agency.

You should start by having a consultation with a bankruptcy attorney in your area to explore your options and see what you're eligible for.

Mark Markus has been practicing exclusively bankruptcy law in California since 1991.  He is a Certified Specialist in Bankruptcy Law by the State Bar of California Board of Legal Specialization,  AV-Rated by martindale.com, and A+ rated by the Better Business Bureau.  

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