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Christie_1The Brunner standard is a legal test used in certain circumstances to determine whether a borrower’s federal student loans can be discharged in bankruptcy. The test was established by the U.S. Supreme Court in the case of Brunner v. New York State Higher Education Services Corp. (1987).

The Brunner test has three prongs:

  1. Hardship: The borrower must prove that repaying the loans would impose an undue hardship on the borrower and their dependents.
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Christie_1There are several ways to discharge federal student loans, including:

  1. Total and Permanent Disability (TPD) discharge: If you are completely and permanently disabled, you may be eligible for TPD discharge.
  2. Death discharge: If the borrower of a federal student loan dies, the loan may be discharged.
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Christie_1The Borrower Defense to Repayment (BDTR) program has undergone so many changes over the past decade it’s hard to keep track.

Notably, I wanted to set the record straight for those who may be receiving weird messages about their pending BDTR apps.

Only the 2019 Borrower Defense Rule imposed a statute of limitations on borrowers, and that rule only applied to loans that were issued after July 1, 2020– it does not apply to most of the BDTR applications. Unfortunately, when ED created its borrower defense application, it used a single application for all three standards without adequately differentiating what warnings would be shown to borrowers applying under different standards. As a result, borrowers get misleading warnings that don’t actually apply to them at all. There are no limitations periods for the 2016 or 1994 Rules (although there are some restrictions on when borrowers can receive a refund of amounts paid towards the loans implicated by the borrower defense application).

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Christie_1Did you realize that we have free videos on what to do about your student loan on our YouTube Channel “Student Loan Sidebar”?  Here’s a post from a few hours ago from one of our followers:
  • YouTube videos on student loan forgiveness have just been absolutely amazing. They break it down so it simple to understand. This whole thing has been so frustrating and these videos help to alleviate much of the anxiety I’ve had. Thank you! 
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arkovich_law-narrowConsumer complaints in Florida have a few things going for them that can make them easy to prove.

One of the things that benefits Florida consumers is our use of the “least sophisticated” debtor test.

What does this actually mean?

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EIDLFirst, and I must stress, EIDL loans are not forgivable.  They were intended to help small businesses recover from the economic impacts of the Covid-19 pandemic.

However, EIDL Advance funds are like grants and do not have to be repaid.

More information is available on the SBA website:

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Christie_1I had a consult recently that is a good overview of what questions our clients have and how we are able to drill down to the essentials and help determine the best path forward to ending student loan debt.  This client reached out to us after viewing one of our Youtube Student Loan Sidebars where we go over the practical impact of new programs and what we see out there to help student loan borrowers.

Client:  300k SL debt, mostly Direct, 23k FFEL.  Client has a pending consolidation app.

Key concern:  How does IDR impact me?  Did PSLF Help Tool but still confused.

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Christie_1All this talk about changes within the federal student loan system, I didn’t want to give the impression that nothing can be done with private student loans.  Just today, we have a client who accepted an offer to save $165,000 on his private student loans!   And this was not a lump sum settlement to be paid all at once.  The terms are the reduced balance is to be paid out over 27 years at a very low interest rate of 1%.  They payment is exceptionally low and finally affordable!

So while a full discharge or 100% forgiveness may not always be possible with a private loan, settlements are very realistic with the right facts.  Contact us if you have a private student loan and need some help getting it resolved!

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arkovich_law-narrowAs we are getting closer to a repayment start date, I wanted to briefly mention that there are several things that should be considered before choosing to refinance a federal student loan:

  • Income Driven Plan availability – the new Repaye program will have an incredibly low payment with ultimate forgiveness that should benefit all but the very highest of wage earners.
  • The IDR Waiver program is causing a one time account adjustment to occur this year giving forgiveness credit for any long term extended forbearances as well as complete write off of loans where repayment has exceeded 20 years for undergrad and 25 years for grad loans regardless of payment plan length.
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