Even after death, student loans bring debt, creditor calls

On behalf of Ellett Law Offices , P.C. posted in 1. Personal Bankruptcy on Thursday, July 5, 2012
Many college students in Phoenix understand the struggle of trying to pay for an expensive education. But imagine attempting to pay off such a cost when no one benefits from the education being paid for. For one family, the harsh reality of this kind of debt relief comes after their son was killed in a car accident. They are left with loans that weren’t discharged after his death and creditor calls that constantly remind them of the tragedy and the financial obligation.
Being a first generation college student from a low-income family, this young man had little choice but to take out several student loans in order to finance his education. His gardener father co-signed, as is often required for student loans. Students, like this young man, expect to be able to pay off these loans in the future, when they’ve graduated and started their careers. Unfortunately, the son’s life was cut short, and his father was left to pay off an education from which no one can further benefit.
If a student dies, the government discharges any federal loans they may owe, and without much problem. However, as was this family now knows, most private student loans are not handled that way. The family is left now to deal with these loans that are no longer held by the companies that originally made the loans, leaving the family to struggle to understand how to make the payments and to whom they can even make an appeal for accommodation.
For a low-income Phoenix family, paying back student loans for someone who is no longer living is financially stressful, to say the least. For this family, as for others in similar situations, finding a way to stop creditor calls and manage the debt incurred by these loans is an important priority.
While bankruptcy may not be an ideal option, considering that private student loans are rarely dischargeable in the process, this family hopes to benefit from what’s called a hardship discharge. This is a provision that allows them to argue that payment of the debt will amount to an undue hardship on the surviving family.
As they work to apply for this crucial exception, there is also a move afoot to amend the bankruptcy laws with regard to private student loan debt so that it can be included in debt obligations that can be discharged.
Source: ProPublica.org, “Grieving Father Struggles to Pay Dead Son’s Student Loans,” Marian Wang, June 14, 2012
Tags: debt relief, debtor’s discharge, personal bankruptcy