SLAP Eligibility
Any debtor can potentially be eligible for student loan discharge. However, far too many attorneys look only at whether there is a very high student loan debt balance, or a debtor with particularly low income, overlooking the opportunity to provide greater relief in bankruptcy discharge. Our attorneys look past the surface and dive deep into eligible criteria that can make or break a debtor’s case for student loan discharge.
In proving a client’s case, our attorneys will ensure that the court is aware of all factors that have lead to the inability to repay student loan debt. By proving to the court that excepting the student loan debt would be an undue hardship for our client, our attorneys will successfully discharge student loan debts in bankruptcy.
Case Development
Our attorneys will ensure we build the strongest case for our client to obtain a student loan discharge. This means that in order to prove undue hardship under the Brunner test, we identify all important and relevant factors for expert advocacy. Some considerations we look for are:
- Age of Debtor
- Household size of Debtor
- Income and likely future earnings
- History of loan repayment
- History of employment
- Educational history
- Medical history and future medical expenses
- Chronic medical concerns
- Other factors that are unique to the client
Brunner Test Strategy
Student loan litigation includes many opportunities to restructure or discharge student loan debt. Our attorneys meet with each client seeking student loan discharge to determine manageable and beneficial outcomes. From there, we build a unique case litigation plan, walking our client through the process.
Adversary Filing
When choosing to file an adversary proceeding, our attorneys will implement a litigation strategy that encompasses considerations for
- Case law developments in student loan discharge
- Timing of filing of the client’s case
- Potential changes in the client’s future employment, family size, and other factors affecting ability to repay debt
Court Representation
Our attorneys will ensure that our client’s case for hardship discharge is presented in the most favorable light before the court. This includes developing a litigation strategy alongside our clients to keep them actively involved in their case. We will aggressively pursue discharge and push for the maximum amount of relief available to our clients. While litigation is an adversarial process in nature, our attorneys are in continuous discussion with opposing counsel to ensure that the case moves forward as quickly as possible toward a resolution. This includes
- Immediately setting forth a discovery and trial timeline
- Seeking stipulations of facts to eliminate unnecessary litigation
- Preparing our client for testimony before the court
- Negotiating with opposing counsel on potential favorable resolutions prior to trial
Settlement Negotiation
Not all adversary cases end with a trial before the court. For many reasons, a client may choose to settle the litigation by agreement with the student loan lender. Settlement provides a debtor with certainty in the outcome of the case and treatment of student loan debt in the future. Prior to, and during the course of litigation, our clients will be advised of potential settlement opportunities that could benefit the client and ensure immediate relief. Some possible outcomes of settlements in lieu of litigation for an adversary cases include agreements to:
- Hold discharge in abeyance pending future events or outcomes
- Principal and interest rate reduction on the loan
- Permanent monthly payment reduction
- Fixed payment for a fixed term remaining
- Permanent interest rate reduction
- Elimination of interest accrual
Attorney Support
Tax Workout Group is a full-service bankruptcy firm that provides representation for debtors from case filing to discharge. We are also available for attorney support or co-counsel in cases where the original bankruptcy attorney may choose not to take on representation for the separate student loan adversary case on behalf of his client. Whether the original attorney wishes to remain involved in the litigation as co-counsel or to hand off the entire case to our firm, we will provide the support and representation needed for student loan litigation, regardless of whether our firm handled the initial bankruptcy filing.
Our attorneys will quickly get up to speed on the facts of the underlying bankruptcy case and review all of the petition, schedules, statement of financial affairs, means test, and history of prior bankruptcy filings filed with the court in order to ensure that the original filing presents the debtors circumstances thoroughly and completely. From there, we will begin to develop a litigation strategy for the client’s case with considerations for:
- Cost of litigation
- Timing of filing
- Considerations for discovery
- Submission of an attestation for discharge prior to trial
- Strategies for direct and cross-examination of debtor and other witnesses at trial
- Motions for summary judgment on all or some of the complaint
Whether you are a debtor seeking an attorney to handle only your student loan discharge case or you are an attorney seeking to partner with a firm that can handle your client’s student loan adversary proceeding, Tax Workout Group is available for consultation or representation.
Bankruptcy Reopening
If you have filed bankruptcy in the past, we may be able to reopen your bankruptcy case to seek student loan discharge, without the need to file a new bankruptcy case. There is no deadline or maximum timeline that prevents a bankruptcy case from being reopened to litigate the issue of student loan discharge.
Our attorneys will review the prior case filing details as well as the debtor’s current financial situation, including income, expenses, debts, family size and dynamic, medical considerations, and past and current hardships in paying student loan debt to determine if reopening the prior bankruptcy case will provide the desired outcome for a debtor.
If a debtor is ineligible to file a new bankruptcy case or if no additional debt has been incurred since the prior discharge, reopening a prior bankruptcy is often the best option for student loan discharge. This provides a debtor with an immediate opportunity to litigate student loan discharge because the discharge in the underlying bankruptcy case has already been issued to the debtor.
Private Loan Discharge
Private student loans can also be discharged in a student loan adversary proceeding. Private student loan contracts often provide fewer benefits and repayment options to borrowers compared with federal student loans that are regulated by the Department of Education. Because of this, the opportunity to prove undue hardship for private student loans involves specific considerations. Some of the factors our attorneys look at in private student loan debts owed by our clients are:
- When the loan was borrowed
- What the terms of the contract require from the lender and borrower
- Length of repayment term in the loan
- Definition of default in the contract
- Remedies or penalties for default provided by the contract
- Co-signer considerations
Private student loans are not backed by a federal guarantee. Therefore, the decision to litigate or settle a private student loan is that of the lender alone, without the need for approval from the federal government. This can provide a great opportunity for discharge of student loan debt for borrowers who are struggling to repay. Often, private lenders do not wish to incur the cost of litigation. Our attorneys will advocate for our clients to convince the private lender there is little likelihood of ability to repay in the future and collection opportunities are highly limited, pushing for an agreement to discharge private loans.
Appeals & Relief
In the event that a client’s student loan adversary does not result in a favorable outcome, the client has the opportunity to appeal the court’s decision. A notice of appeal from the court’s judgment in the adversary proceeding must be filed within 14 days of the clerk’s entry of the court’s decision. This deadline is hard and fast and can only be extended for very limited reasons. Therefore, it is important to understand the need to move quickly to appeal an unfavorable decision.
An appellate court is limited in what it is allowed to review in a case. For example, the appeals court cannot take on additional evidence or hear from additional witnesses. Instead, the appeals court reviews the factual findings made by the bankruptcy court to determine if there was an error made that affected the outcome of the case.
If the bankruptcy court’s decision is unfavorable to a debtor, but an appeal is not likely to result in a beneficial change for the debtor, our firm will review other alternatives with our clients, including student loan refinance, forbearance, deferment, and income-based repayment plans that may be available.
