 Zombie
student debt lives!
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 Dear
Bankruptcy Adviser,
I filed bankruptcy in 1992 on a school loan and the judge deemed
it to be too much of a hardship for me to repay it and declared
it resolved. I have just recently received a bill on it again with
interest built up over the past 14 years. I sent them a copy of
the bankruptcy and a copy stating that a judge can declare it resolved
if he sees it as too much of a hardship for it to be paid five years
ago. Now they are harassing me again and I am still struggling and
juggling to make ends meet. Can you help me to understand what is
going on?
-- Cheryl
 Dear
Cheryl,
There are two possibilities, Cheryl. If the judge
from 14 years ago discharged your student loans, then you have a
case against the collection agency that's bugging you. If not, then
you probably owe every penny.
In the first case, you need to find out who's calling
you. Make sure you keep a record of every call (note the person's
name and the time) and be sure to find out whether the person calling
is an attorney. Collection agencies are constrained by the Fair
Debt Collection Practices Act, which says that they aren't allowed
to lie when they're harassing you; they can only harass you with
honesty. Any calls made after you've provided verification of the
discharged debt would constitute illegal conduct under the act.
Law firms hired to collect a debt are regulated by the act, but
attorneys who are employees of the original creditor are exempt.
I recommend contacting an attorney to determine the
strength of your case versus whatever entity is trying to collect
this discharged debt from you.
However.
I've seen many clients over the years who thought
their student loans had been discharged because they included them
on their schedule of debts, alongside credit card debt or other
dischargeable debt. However, student-loan debt is different. Student
loans have advantages, but they also carry disadvantages, and here's
one: In order for student-loan debt to be discharged, the petitioner
must pass what's called the Brunner test (pronounced "BROO-ner"),
and it's a pretty difficult, three-step test to pass. You must prove:
- That you cannot maintain, based on current income
and expenses, a "minimal" standard of living for yourself
and dependents if forced to repay loans.
- That additional circumstances exist indicating
that this state of affairs is likely to persist.
- That you have made good-faith efforts to repay
loans and have been unsuccessful.
As an example of how difficult this test is to pass,
the kinds of people who DO pass often have debilitating injuries,
missing limbs or other conditions that are severe and irreversible.
Cheryl, many people have made the mistake of thinking
that their student loans are discharged when they are not. Talk
to an attorney to precisely determine the best course of action.
As well, ask the attorney what it might cost to retain her just
to handle the collections agency. If you still have to pay off your
student loans there's no need to put up with harassment. If you
can, let a lawyer take those calls.
Justin Harelik is a practicing attorney in Los Angeles.
To ask a question of the Bankruptcy Adviser go to the "Ask
the Experts" page, and select "Bankruptcy" as
the topic.
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