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After a Previous Bankruptcy We Are Still Drowning in Sallie Mae Student Loans

Dear Steve,

A few years ago my husband & I filed for chapter 7 BK & it was discharged (2008). We were told that we couldn’t include our huge private student loan ($68,000) at that time by our attorney.

Our private student loan is actually a Sallie Mae “private student consolidation loan” that we stupidly rolled my husband’s federal student loans, credit card debt, education expenses for my schooling into one huge loan..thinking that this would be a great idea.

The loan is in my name only & was co-signed by my grandma. The schools that we attended are beauty school & my husband went to a vocational school as well. Originally, I was told that after a certain amount of time, my grandma could be released as a co-signer. We are being told now that under no uncertain terms she will ever be able to be released from the loan.

I became unemployed last July & have been unable to find another job & have a new infant to care for as well. My husband works full time & has a part time business that I help run from home.

We have gotten behind on our student loan payments & I have set up payment arrangements with Sallie Mae for the back payments. Even though I have set up payment arrangements that are automatically deducted from my account, Sallie Mae still makes collection calls up to 10 times a day to me & about 6 times a day to my grandma.

My grandma has gotten so upset over these calls. I have asked Sallie Mae to call me but they still call my grandma and harrass her. Is there anything I can do?

1. Is it possible to re-open my original Chapter 7 BK & include my student loan or would we need to file again?

2. Since our student loan is a “private consolidation loan” is that a dischargable loan?

3. If we can’t open our original BK, would Chapter 13 be an option?

4. Is there anyway we can go after Sallie Mae for harrassment to my grandma & possibly get them to remove her as a co-signer?

5. If we file BK again, will Sallie Mae sue my grandma?

6. Do you know of any experienced BK attorneys in the Greater Seattle area (who have experience in discharging student loans) that could help us? We really liked our original BK attorneys but they haven’t done anything related to student loans since 1982.

Lis

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Dear Lis,

In fairness to your bankruptcy attorney at the time the issue of student loan discharge ability is a rapidly growing subject. More awareness is still necessary as many people still buy in to the belief bankruptcy can’t do anything for student loans. That’s just not true.

There is a specific subset of private student loans that can be almost instantly discharged in bankruptcy. These include loans for non-traditional education like beauty schools and vocational schools. I’ve written about this specific situation before and I invite you to read “These Private Student Loans Can Be Easily Discharged in Bankruptcy” for more information.

I’d first talk to your previous bankruptcy attorney and bring the article above to their attention and ask them if they can offer you any assistance with these, even filing an adversary proceeding after the fact, as others have, to potentially discharge the loans.

If no other solution exists then a chapter 13 bankruptcy would be an option. It would do two things. First, it could give a new attorney a crack at discharging the loans if your other attorneys won’t/can’t. Second, it would nearly instantly stop all collection calls while you were making affordable payments through the chapter 13 bankruptcy.

There is a chance during the five year chapter 13 that Congress will take needed action to force private student loan lenders to make some reasonable and affordable payment plans available.

Of the many student loan bankruptcy cases I’ve researched and written about I have not seen one where the lender went after the co-signer after a bankruptcy discharge. It might happen, I’ve just never seen it. – Source

As far as finding a new attorney, I suggest you visit this site.

After a Previous Bankruptcy We Are Still Drowning in Sallie Mae Student Loans
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About Steve Rhode

Steve Rhode
Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
  • Lis

    Steve!

    Thank you sooo much for your response. This helps us figure out the next steps. I did forward your article to my previous BK attorney & have yet to hear from them. I also submitted a request to find another attorney who possible has a little more experience in this area. I will let you know how it goes. Thanks again for posting these fantastic articles. I feel like I can see a light at the end of the dark student loan debt tunnel :)

    -Lis

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