Bankruptcy Related

My Bankruptcy Attorney Told Me My Student Loans Were Discharged in My 1995 Bankruptcy

Written by Steve Rhode

Question:

Dear Steve,

In 1995, I filed bankruptcy and my student loan was included in the bankruptcy. At the time of the bankruptcy, my attorney informed me that if the loan was not able to be discharged, I would be informed. I was never informed that it wasn’t able to be discharged.

Over the last 20 years, I have gotten maybe 5 calls regarding it and I told them I filed bankruptcy and that was the end of the conversation.

In April of 2017, I received a letter from my employer stating the Department of Education has garnished my wages for 15%. I contacted the collection agency and explained that I filed bankruptcy and she stated it was not eligible to be discharged. I asked her if it wasn’t eligible to discharged, why wasn’t I informed so that I could make payment arrangements or something, she said they weren’t able to contact me since I told them I filed bankruptcy. The only papers I had from the bankruptcy was the part that was filed, not the discharged papers. So I sent a copy of all the bankruptcy papers I had, along with papers for filing hardship including all financial papers.

At the time, I couldn’t afford my to pay my bills with my paychecks. I have been sick and have been missing a lot of work. I was informed that because they didn’t have the discharge papers, they couldn’t consider it to be discharged.

I filed in GA and live in VA. I contacted the bankruptcy courts in GA and because it was so long ago, the discharge papers are no longer even held in archives, so no way of getting the discharge papers. The attorney that filed to begin with must be retired because I am not able to get in touch with her.

I recently found the discharge papers and contacted the collection agency again. They have requested for me to send it to them but stating even though it is on the discharge, doesn’t mean that it is actually discharged. I attached a copy of the discharge papers. I can’t find an attorney that will help me because they didn’t handle the bankruptcy to begin in. So I don’t know what to do or what I can do.

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What recourse do I have, if any? What is my next step?

Kenya

Answer:

Dear Kenya,

Thank you for sending a copy of your bankruptcy filing with your question. You listed one debt that seems to be a student loan but the creditor is listed as Office of Student Financial.

The actions being taken against you with the wage garnishment appear to be a delinquent federal student loan.

There are two issues here. The first is your bankruptcy filing does not list a federal student loan specifically. The second is federal student loans were dischargeable like any other debt in bankruptcy prior to 1976. The law changed again in 1990 when the bankruptcy law said you had to have the federal student loans for at least seven years to be eligible for discharge. It appears from your bankruptcy filing in 1995 your loans were taken out in 1993.

If your 1995 bankruptcy included a federal student loan and you were hoping for it to be discharged you would have had to file a secondary proceeding seeking that discharge.

Federal student loans don’t have a statute of limitations so the fact the loan was silent for such a long period of time does not really matter.

Now that it appears you have an Administrative Wage Garnishment for the old federal student loan your best choice is to enter rehabilitation plan with the loan servicer to stop the garnishment. Read this article.

I’m not an attorney and can’t give you legal advice. If you want legal advice about your specific situation, please talk to an attorney who is licensed in your state.

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About the author

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.

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