Submitted by AM (not verified) on December 6, 2008 - 7:23pm.
If anyone reading this site has any influence with Senator Durbin, please point out to him that, with a new President, a new congress, and legislators bailing out companies left and right, this is the time to INSIST on equitable treatment instead of settling for middle ground. Private loans (both profit and non-profit) should definitely be dischargeable in bankruptcy. These are the loans where the borrower has NO protection whatsoever. Government guaranteed loans should also be dischargeable, but Hillary Clinton's bill contained an obscenely long waiting period. Why? By the time you add back in forbearances and deferments to Hillary's seven years, the period before being allowed a discharge could stretch out far too long for the debtor and his/her family facing financial collapse. Also, many times the borrower isn't even aware of when the clock is running on their forbearances, how many they have had, etc., because these are sometimes applied retroactively, and can even be done without the borrower's knowledge. There were instances in the 1980's and 90's, a time when government student loans WERE dischargeable, that debtors in bankruptcy were denied discharge of their student loans because the lender calculated the debtor's 5-year (or later on) 7-year period based on forbearances that had not even been requested by the borrower, and the courts abetted this practice -- the rationale being that the lender should not be penalized for attempting to “help” the borrower.
Advocates should RIGHT NOW press forward with bankruptcy reform. Watch how fast Sallie Mae will be willing to work with borrowers if student loans can be discharged. Mortgage lenders are working with homeowners because they know the homeowner can just walk away. Sallie Mae needs a similar incentive.
Do you know Senator Durbin?
If anyone reading this site has any influence with Senator Durbin, please point out to him that, with a new President, a new congress, and legislators bailing out companies left and right, this is the time to INSIST on equitable treatment instead of settling for middle ground. Private loans (both profit and non-profit) should definitely be dischargeable in bankruptcy. These are the loans where the borrower has NO protection whatsoever. Government guaranteed loans should also be dischargeable, but Hillary Clinton's bill contained an obscenely long waiting period. Why? By the time you add back in forbearances and deferments to Hillary's seven years, the period before being allowed a discharge could stretch out far too long for the debtor and his/her family facing financial collapse. Also, many times the borrower isn't even aware of when the clock is running on their forbearances, how many they have had, etc., because these are sometimes applied retroactively, and can even be done without the borrower's knowledge. There were instances in the 1980's and 90's, a time when government student loans WERE dischargeable, that debtors in bankruptcy were denied discharge of their student loans because the lender calculated the debtor's 5-year (or later on) 7-year period based on forbearances that had not even been requested by the borrower, and the courts abetted this practice -- the rationale being that the lender should not be penalized for attempting to “help” the borrower.
Advocates should RIGHT NOW press forward with bankruptcy reform. Watch how fast Sallie Mae will be willing to work with borrowers if student loans can be discharged. Mortgage lenders are working with homeowners because they know the homeowner can just walk away. Sallie Mae needs a similar incentive.