A Look at a Cosigners Navient Student Loans Discharged in Bankruptcy

As part of what has become an ongoing look at student loans discharged in bankruptcy the example today is where a cosigner discharged their liability for federal student loans with Navient Solutions.

This case is yet another example of how the financial hardship of having to repay unmanageable student loans can lead to a discharge of the student loan debt.

14-06048 Heartt

According to public records, the Plaintiff was a cosigner for her brother on his student loans

The court documents state, “Plaintiff’s brother attended Oregon School of Massage in Salem, Oregon beginning summer of 2007 through fall 2008. During this time, he completed 250 hours. He did not receive a certificate because the program required that he complete 550 hours. In order to pay for his education, plaintiff’s brother borrowed funds in the form of unsubsidized private student loan trust and unsubsidized Stafford Loans. Plaintiff cosigned on all of these loans. As of March 5, 2013, the total outstanding principal balance of these loans is $14,966 and the total outstanding interest is $726.

Since plaintiff’s brother left the Oregon School of Massage, he has not been willing to pay on these loans because the burden would soon fall on plaintiff, the cosigner. Plaintiff’s brother has the ability to make payments on the loan.

Plaintiff filed for Chapter 7 bankruptcy protection on June 11, 2013. Plaintiff’s schedule F listed Sallie Mae, Inc. (hereinafter “Sallie Mae”) as a creditor for student loan debts.

Plaintiff’s Chapter 7 bankruptcy was reopened on March 26, 2014 in order to discharge this cosigned student loan debt.

Defendant Sallie Mae is listed as the loan contact for all the loans issued to plaintiff. Defendant U.S. Department of Education (hereinafter the “Department of Education”) is listed as the loan contact for seven of the fourteen loans issued to plaintiff.

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Due to Plaintiff’s undue hardship, and despite her best efforts, Plaintiff is unable to repay her brother’s student loans.

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Plaintiff has attempted to obtain information regarding brother’s loans, and all information presented is to the best of Plaintiff’s knowledge.

Repayment of the educational loans referred to above will cause undue hardship for the plaintiff under 11 U.S.C. § 523(a)(8)(B) for the following reasons:

  1. Plaintiff will not be able to maintain, based on her current income and expenses, a minimum standard of living for herself and her dependent if forced to repay the loans;
  2. There are additional circumstances that exist, which indicate that plaintiff’s inability to maintain a minimum standard of living for herself and her dependent is likely to persist for a significant portion of the repayment period of the student loans; and
  3. Plaintiff has made good faith efforts to repay the loans, including but not limited to attempts to obtain employment, maximize income and minimize expenses;
  4. Plaintiff is merely a cosigner for her brother, and her brother has the ability to make payments on the loan and eventually pay it back.”

On June 16, 2014 Navient agreed to a Stipulated Judgment agreeing the liability was included with the bankruptcy discharge.

This case was filed by:

Keith D. Karnes
1860 Hawthorne Ave. Ste. 10
Salem, OR 97301
Telephone: (503) 385-8888
Facsimile: (503) 385-8899

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