THE HISTORY OF STUDENT LOANS AND BANKRUPTCY

Under current law, both federal and private student loans are not dischargeable in bankruptcy unless you can show that your loan payment imposes an "undue hardship" on you, your family, and your dependents. It wasn't always like that.  While the courts ponder the future of the recent student loan forgiveness legislation, the history of student loans and bankruptcy should be considered. An excellent report can be found at When Did Student Loans Become Nondischargeable in Bankruptcy?

WHEN STUDENTS ARE NOT LEGALLY RESPONSIBLE FOR COLLEGE LOANS

From Wiki: "A PLUS Loan is a student loan offered to parents of students enrolled at least half time, or graduate and professional students, at participating and eligible post-secondary institutions. The original, now obsolete, meaning of the acronym was "Parent Loan for Undergraduate Students"."

And see this article: http://www.forbes.com/sites/laurengensler/2016/09/07/how-some-millennials-end-up-paying-their-parents-student-loan-debt/#5252a08c449f

TAX LIENS & STUDENT LOAN DEBTS

This is from an email I received from Shenwick & Associates:

Many of our debtor clients ask the question: if I owe the IRS taxes and I'm collecting Social Security benefits or going to collect Social Security benefits in the future, can the IRS levy my Social Security payments? Unfortunately for delinquent taxpayers, through the Federal Payment Levy Program (FPLP), 15% of a taxpayer's Social Security benefits may be levied to pay delinquent tax debt. However, certain other federal benefits, such as lump sum death benefits, Supplemental Security Income (SSI) and benefits paid to children are excluded from the FPLP levy. What about student loans? If a debtor defaults in the payment of federally guaranteed student loans, then the IRS may levy on the debtor's tax refunds and apply those monies to the balance of the student loans. Additionally, if a debtor defaults on federally insured outstanding student loans, the government can take some federal benefit payments (including Social Security retirement and disability benefits, but not SSI) as reimbursement for student loans, but not the full amount (see below). With respect to student loan defaults, the government cannot take any amount that would leave you with benefits less than $9,000 per year or $750 per month. And it cannot take more than 15% of your total benefits for either student loan defaults or delinquent taxes. If you have questions about the federal government's powers to seize your benefits for the payment of delinquent taxes or publicly guaranteed student loans, please contact Jim Shenwick. My LinkedIn profile
jshenwick@gmail.com • Shenwick & Associates

OUTSTANDING STUDENT LOAN AND DIVORCE

Heydt-Benjamin v Heydt-Benjamin, 2015 NY Slip Op 02934, Decided on April 8, 2015 Appellate Division, Second Department:

"In addition, the court properly determined that the defendant alone was required to bear the obligation of repayment of the balance of her student loan because no benefit inured to the marriage (see Dashnaw v Dashnaw, 11 AD3d 732, 735; see also Mahoney-Buntzman v Buntzman, 12 NY3d 415, 422 n)."

ON STUDENT LOANS

At yesterday's mortgage foreclosure clinic at the Nassau County Bar Association, several matters involved the connection between student loans and mortgage foreclosure. There are many.

One aspect of student loans that has been in the press recently is the under utilization of the Public Service Loan Forgiveness Program, which is intended to encourage individuals to enter and continue to work full-time in public service jobs. Under this program, borrowers may qualify for forgiveness of the remaining balance of their Direct Loans after they have made 120 qualifying payments on those loans while employed full time by certain public service employers.

Here is a link to the program's website:

http://studentaid.ed.gov/repay-loans/forgiveness-cancellation/charts/public-service