What can I do about student loans that I cannot repay if I’m now living abroad?

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What can I do about student loans that I cannot repay if I’m now living abroad?

After I graduated, i moved abroad. However, with the money I am earning here, I’m not able to afford my federal and private student loan repayments. My parents have been repaying my private loans because they are co-signers. Now my parents do not have the means to pay those loans anymore. I want to file bankruptcy. What do I need to do? There is not much of a way that I will return to the US for awhile.

Asked on May 27, 2014 under Bankruptcy Law, New York

Answers:

M.T.G., Member, New York Bar / FreeAdvice Contributing Attorney

Answered 6 years ago | Contributor

Student loans were dischargeable in bankruptcy prior to 1976. With the introduction of the US Bankruptcy Code (11 USC 101 et seq) in 1978, the ability to discharge education loans was limited. 

Here is the language now:

523(a) Exceptions to discharge

...
(8) unless excepting such debt from discharge under this paragraph would impose an undue hardship on the debtor and the debtor's dependents, for -- 

    1. an educational benefit overpayment or loan made, insured, or guaranteed by a governmental unit, or made under any program funded in whole or in part by a governmental unit or nonprofit institution; or
    2. an obligation to repay funds received as an educational benefit, scholarship, or stipend; or
  1. any other educational loan that is a qualified education loan, as defined in section 221(d)(1) of the Internal Revenue Code of 1986, incurred by a debtor who is an individual;

Your parents need to seek counsel to help determine if they would qualify under the discharge and you need counsel to determine what you can do, possibly defer, until you have the means to pay. Some one needs to look at the facts face to face.  Good luck.


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