Discharge Student Loans

LAW OFFICES OF RICHARD D. GRANVOLD, P.S.
31620 23rd Ave So, Ste 205
Federal Way Wa 98003-5049
(253) 945-6062

Note that the Debtors obligations under the debt is dischargeable under Section 523(a)(8) only if the Debtor proves that that section applies. The term “student loans” is itself an issue! (This letter is for information only; no person should rely thereon without the advise of an attorney as the laws and interpretations of it and case law constantly changes). In fact below I show what I used to provide clients and the results of about 58 lawsuits. HOWEVER, I no longer litigate student loans as retiring in 2023. I strongly suggest if bankruptcy student loan relief is sought to contact Latiffe Neu or Christina Henry in King County Washington both of which I believe know the complicate laws on private student loans and keeping up to date on federal loans. Thus, give them a call. However, I repeat below what I have advised prior clients and if you are desiring to file bankruptcy and not attempt to discharge student loans give Richard Granvold a call.

When discharging student loan debts, this is what you need to know.

1. “Student Loan”: Threshold issue is whether exception applies to facts of your case:

Thus, the following elements must be proven by creditor: Liability must be for one of the following:

• educational benefit overpayment or loan made by a governmental unit; or
• educational benefit overpayment or loan insured by a governmental unit; or
• educational benefit overpayment or loan guaranteed by a governmental unit; or
• educational benefit overpayment or loan made under any program funded in whole or in part by either:
  • a governmental unit or
  • nonprofit institution; or
• an obligation to repay funds received as an educational benefit, scholarship or stipend; or
• Any other educational loan that is qualified education loan, as defined in section 221(d)(1) of the Internal Revenue Code of 1986, incurred by a debtor who is an individual;

One of the above elements must be present before the remainder of the statute applies as if no element is present, then the debt will be discharged unless it falls within another exception such as fraud, etc.
In light of the above, the first analysis is to determine which of the provisions your loan falls within. If the loan does fall within one of the above elements, then the remaining analysis is the only way to discharge such debts. See my separate page on whether “Are private student loans dischargeable”?

What must be proved to qualify as a “private student loan” is a separate issue and a separate page posted with  information on that issue on my website on March 10, 2022. The cases on that area of law have changed now since 2018!

2. What Must be Proven: “Undue Hardship”:

Under the law, in order to prove a debt is dischargeable pursuant to 11 U.S.C. 523(a)(8), you, as debtor and the plaintiff must establish the elements set forth below.
“Student loans” are excepted from discharge pursuant to 11 U.S.C. 523(a)(8) only if the debtor sues in bankruptcy court and establishes an “undue hardship” . Thus, government-funded or
guaranteed student loans are nondischargeable “unless excepting such debt from discharge …will impose an undue hardship on the debtor and debtor’s dependants. The debtor must compare the costs of such litigation with the amounts of such student loans attempting to be discharged. This is especially important if you owe less than $10,000 as the cost to litigate if not settled or unopposed will exceed $7,000.00.
The only real issue is whether or not excepting such debt from discharge will impose an undue hardship on the debtor.

3. Burden of Proof:

The debtor has the burden of proving that repayment of the debt will impose an undue hardship.

4. Discharging loans separately:

The court can find a loan partially dischargeable. If a debtor has the ability to pay a portion of the debt, the court may but is not required to use its equitable authority under Section 105(a) to grant a partial discharge, if “Undue Hardship” is proven.

5. Definition of “Undue Hardship” and tests to determine:

The term “undue hardship” is not defined in the Bankruptcy Code and must be determined based on the facts and circumstances of each case. However, the 9th Circuit Court of Appeals has adopted the “Brunner” test to determine whether a student loan is dischargeable as an undue hardship. The Brunner test has three parts which the court must consider before deciding whether to except a student loan from discharge. Explaining how each of these 3 prongs is established is beyond this document and in any case is argued over 24 pages in trial briefs. The Debtor bears the burden of proving all of the following three parts:

• that [s]he cannot maintain, based on current income and expenses, a minimal standard of living for the debtor and the debtors’ dependant(s) if forced to repay the loans;
• that additional circumstances exist indicating that this state of affairs is likely to persist for a significant portion of the repayment period of the student loans; and
• that the debtor has made good faith efforts to repay the loans.

6. Why choose attorney Richard D. Granvold to advise you on student loans?

Experience. You are strongly challenged to call every attorney in your county and King and Pierce county and ask: have you ever litigated a student loan trial ever in your career? If they answer yes, ask “how many times”? Then ask, would they ever litigate another such trial. Finally, ask “Who would you recommend who advises debtors on such options?”. You will be hard to find an attorney who has ever litigated more than one such trial ever, and most have never tried one in their careers.  However, I do know of two who may assist you with respect to “private student loans”. Those practicing many years know Richard D. Granvold will assist and advise debtors with such debts. Furthermore, in light of the many cases he has litigated, he can analyze your case to advise you on options, and what to do including whom to look for if litigation is needed.  You should want to know your options, both non-litigation, and in settlements and litigation..and has done so since that first trial in 1991! Ask any other attorney where is their results of prior trials or settlements; Richard D. Granvold’s results are set forth below!

7. Actual Student Loan Lawsuits Filed & Results:

All cases were filed and resolved by attorney Richard D. Granvold unless otherwise indicated for example when assisting Pro Se clients.

99-13284-KAO Filed Nov. 29, 1999. 39 yr old woman, no children; net income of $1,954.04 $38,229 discharged in full. Won!

01-01627-PHB Filed Dec. 26, 2001. Dec 19, 2002 trial Discharged $46,612.58; not discharged $18,000 payable at $100 monthly zero % interest. Won!

01-4301-PBS Filed Dec. 21, 2001. Trial 2002 61 yr old, debts not discharged. Net income $3,101 no children. Judge first stated partial discharge but changed mind in final ruling. $64,927. Near retirement age…hard case.

02-01256-KAO Trial. Filed May 8, 2002. Not discharged. Single very young lady, no children $67,500 Net income $1734.

03-01136-PHB Filed March 28, 2003 Settled 10-2-03. Owed $7,690; settled for $5,454 but payable at $37.88 monthly. Great Settlement!

03-01117-TTG 41 yr old lady; $103,000 loans; medical problems, law school grad; all discharged except $8,400 payable $100 monthly @ zero %. Won!

03-01124-SJS Filed March 24, 2003. Trial. Not discharged. 42 yr old with 2 children 14 and 15. $40,112

03-01327-PHB (Guillory) Filed July 17, 2003. Trial all discharged. Defendant ECMC appealed. 9th Circuit BAP upheld the discharge of all debts. No. WW-04-1008. 4 person family 2 sons aged 10 and 11; his net monthly $2,959.15 hers $477.74 joint $3,436. Won!

04-010350-KAO Filed 1-21-04 Case dismissed; young lady, owed 3 different creditors; debtor while in middle of settlement proceedings almost signed by defendants reducing monies owed, she obtained new job, told present employer who told boss who told other attorney for large creditor who then backed out of settlement stipulation! Case thus dismissed!

04-01410-TTG Filed Sept. 1, 2004. Settled May 2005 discharged approx. $149,000 in student loans; agreed to pay $56,000, no payments for 2 years, then at $200 + per month, low interest rate until paid in full. Great Settlement!

04-01418-KAO Filed Sept 8, 2004. Settled 5-2-05 $28,835 full amount owed, but interest at 4% and paid twice yearly payments to allow for seasonal income. Settled!

04-01487-KAO Filed Oct. 21, 2004. (Fournier) Owed over $59,000 ; debtor has bipolar medical condition; settled for $5,000.00, all remaining debt discharged. Great settlement discharged $54,000!

04-01531-KAO Filed Nov. 4, 2004. Owed $94,316.61 70 yr old with young wife and child; case dismissed so debtor could join W D Ford program which will discharge his debts when he passes away. Separate issue is taxable effect of that.

05-01034-SJS filed January 19, 2005; continued to November 2006 to determine possible medical problems; case settled on Heal loans, other student loans case dismissed for resolving in future;

05-01041KAO filed January 27, 2005; some defendants defaulted; all other defendants agreed to discharge of debts which totaled over $189,798; Won!

05-01040-KAO Filed Jan 28, 2005. Default judgment entered, debts discharged. Won!

05-01184-KAO Obenchain . Filed May 6 2005 owes $64,098.18. Oct. 6,2006 court discharged: no payments in 12 years. Net income of $2145. Won. All debt discharged 11-15-06; no medical problems, no children; defendant appealed and then dismissed appeal WW-06- 1432;

05-01201-SJS Filed May 20, 2005; (Carnduff) debtor #1 individually owes $190,872, debtor #2 owes $168,872 (divorced as of trial date) obtained default order discharging against 4 defendants totaling over $210,000.00 ; court ruled against debtors for other amounts at trial. Appeal #1 :Debtor’s appealed to 9 Cir. App. Court WW-06-1200 Appellate court hearing 11-16-06, March 30, 2007 the appellate court issued ruling reversing the judge and remanded for further action published decision 367 BR 120 In Re Carnduff; subsequent trial won on prong 3; court imposed partial discharge; Appeal #2: filed by debtor concerning partial discharge September 2007 re various issues; WW-07-1362 BAP upheld courts ruling, no remand.

05-01221-TTG (Chaffin) Filed June 10, 2005; owed $406,000 jointly by couple, trial court discharged all except required payments of $850 monthly for maximum of 9 years; ECMC appealed to District Court No. 06-CV-0445 ; District Court on Appeal upheld trial court on 11-21-06! Won at trial and on appeal!

05–01268-KAO (Vohr) Filed July 20, 2005; plaintiff attorney; stipulated order settlement entered, owed $102,280.61 with interest at 9%, settled for $85,000 at 4%, payable at $348.66 monthly for 120 months, and then $570.75 for 180 months. Good Settlement: Attorney debtor!

05-01398-SJS (Brittian) Filed 10-27-05; obtained default orders against $242,153 against some defendants; settled with one defendant owed $11,364 for total of $2,000 payable at $35 monthly at 4.5% interest; remaining 2 defendants owed approximately $190,000 trial on 4-18-06 court ruled against defendant, including lack of bad faith based partly on not paying back defendant out of big payment received.

05-01416-TTG (Moreno) Filed approx. 11-10-05; 55 year old owed $87,821.44 at 7.94% interest rate, settled case for $38,000 at 2% interest at $297.04 monthly. Great settlement!

06-01313KAO Filed 7-6-06 (LaCoste) Assisted pro se individual who owed over $32,526; Stipulated judgment entered 10-5-07 to discharge all the debt!

06-01450KAO Filed 11-22-06 (Hanson) Over $78,000 owed, prior attorney handled case and case closed; I reopened case, filed adversary and settlement reached for $6,000 Aug, 29, 2007 which debtor paid with loans from relatives and rest of debt will be discharged; all monies paid, discharge order to be entered shortly after 10-10-07;

07-04039-PBS Filed 3-15-07(Blackbird) over $600,000 loans; trial on Oct 22, 2007; debtor owed almost $700,000 (Seven Hundred Thousand), chiropractor, studied to become doctor; 11-30-07 court ruled $12,500 owed one defendant not discharged and $32,085 owed another not discharged; all other debts discharged including $330,866 owed Key Bank discharged which Key Bank appealed and subsequently dismissed appeal WW071455; ECMC also appealed discharge of $217,920 WW071454 Appellate court overturned trial judge on prong 3 (good faith) deadline missed to further appeal and thus case terminated; thus over $400,000 discharged and debtor could file Chapter 13 as result of total debts being below threshold to file a Chapter 13!

07-01367-KAO Filed 12-27-07 (Robert and Sarah Scott) Many defendants, trial date was August 25, 2009. Won: Sept 25, 2009 court’s ruling was all debts discharged of $322,443! Appealed by one defendant Dec. 2009. Published case 417 B.R. 623 (9-25-2009); Settled with only appealing party: owed that party $109,329.56; settled for $29,908 but payable over 25 yrs 0% interest, 10 yrs at $50 month, 6 yrs at $75 month, 6 yrs at $100 month and final 3 yrs at $314 month. Dismissal of appeal filed 3-30-2010.

07-01368-KAO Filed 12-27-07 (Deanna Scott) Many defendants. Discharged several defendants by default or judgment. Owed over $137,000 on remaining 2 defendants..settled for $11,000 before trial August 20, 2009. Paid from retirement proceeds! Good Settlement!

08-04016-PBS (Cruz) Filed 3-3-08; Settled: 9-12-08; Debtor owed $42,724 at 7.22% interest and was being garnished creditors wanted approx $1,000 a month; settled for $34,564 (saving $8,164) but paid at $190 a month for 24 months and then $400 a month (when one child leaves daycare) resulting in feasible payment schedule.

08-01307-TTG (Albornoz) Filed 11-11-08 Won! 8-31-09 Trial. Debtor owed over $144,000 to remaining 2 defendants. Settled with 3rd one at $25 a month until $900 paid. Owes $200 a month for next 70 months.

10–01216 (originally 06-11611) Filed April 14, 2010 ( Marlo ). Assisting her PRO SE case. Court approved order reopening case 4 yrs old which her prior attorney advised her she could not discharge student loans!; adversary lawsuit filed . Owes approx $33,200 to ECMC; other defendants default judgments entered against. She qualified for disability discharge and federal government agreed she would owe no debt upon dismissal of case so original holder could repurchase loan. Thus NO $ owed, all discharged in this 4 year old case!

10-01151 Filed March 15, 2010 (Gamble). All resolved. Default judgments or agreed judgments against many defendants. Paid $4,500 to Sallie Mae to settle $37,000 debt; dismissed against ECMC who is owed $246,579 so he can join program and pay $20 to $70 monthly and thus be able to make payments to avoid enforcement of that debt! Great result.

10-01206 Filed April 9, 2010 (Talon-Kayne); Default judgments of estimated over $350,000 entered against all defendants June 10, 2010, and agreed judgment against Alaska also. All debts discharged. No more debt owed!

10-04178-BDL Filed June 18, 2010 (Hamilton) Owed over $190,000 . Won at Trial on 2-15-11 Established Undue hardship; court granted partial non discharge of $94,000 payable at 5% over 25 years due commencing 11-2011. Thus, over $96,000 discharged!

10-01345-KAO Filed June 25, 2010 (Rhodes) Owed $158,440 as of 1- 4-11. Won at Trial on 1-11-11 All discharged except $35,000. Defendant (ECMC) appealed to District Court. 11-S003. Rhodes handled his own appeal pro se. District Court reversed 2:11-cv- 00194-JCC and Rhodes did not appeal this case…disappeared.

10-16168-MLB Filed Sept. 16, 2010 (Buchanan ) Owes $28,000 plus Pro Se filing Agreed order discharging against one defendant leaving one defendant left Sallie Mae. Order entered 3-25-11 to discharge all debts so no monies remaining owing to anyone! Great Result: no monies owed..pro se case!

10-01642-KAO Filed Oct. 22, 2010 (Deyerin) Pro se attorney. Debtor owed over $190,000 . Lost. Court ruled she was attorney and should not be home schooling child with special needs despite her testimony, etc.

10-01635-SJS Filed 0ct.22, 2010 (Bowen) Owes over $230,000 Great settlement w/o trial or depositions July 28, 2011: (1) Sallie Mae owed $14,162 settled for $12,000 at 3% interest and at $66.55 a month discharging $2,162; (2) NCT owed $57,722 with co-signor, settled for $26,946 discharging $30,776 paid at $90 a month and release of co-signor liability; (3) owed ECMC $142,810 and discharged $7,000 and entered program on remainder; (4) Loan Science owed $61,610, settled for $46,508 discharging $15,101 and payable at $50 5 yrs, $75 5 years, $125 5 years, $200 5 years all above at zero % interest, then $162.57 for 10 years; (5) Bank of America discharged by default order;

10-01681-MLB Filed Nov. 2, 2010 (Kelly) owes $82,286. Trial 6-14- 11. Won! Ruling on 7-8-11; owed $105,253 court ordered partial payment of $21,600 payable at $250 at 5%; defendant appealed District Court, which reversed on Prong 3 April 2012 2:11-cv-01263-RSL; appellate court decision appealed to 9 Circuit on 5-11-2012 pro se.  Feb. 27, 2015: 9th Circuit US Court of Appeals 2:11-cv-01263-RSL  issued memorandum decision upholding the trial court win  in In Re Kelly 12-35377 above! The 9th Circuit reversed the District Court Judge who had overturned the Trial Judge’s decision and thus reinstated the partial discharge as ordered by the Bankruptcy Judge!
10-04388-PBS Filed Nov. 23, 2010 (Corpeno) owes $213,0000 Trial on 7-19-11; obtained discharge of (a) $24,875, (b) owed Wells Fargo $35,327 settled for $4,500 lump sum payment; (c) owed Chase $77,722, settled for $6,000 at $50 monthly at 3%; (d) LOST at trial ruling on 8-11-2011: owes still $70,244 to Key Bank and $15,332 to US DEPT OF ED. (Prong 2 and 3). So discharged $127,424!

10-04416-BDL Filed Dec. 16, 2010 (Samson) owes over $114,000. Great Settlement 9-7-11: One defendant owed $101,452 settled for $41,700 paid at zero % interest by monthly payments of $75 for 3 yrs, then $125 5 yrs, then $150 5 yrs, then $175 5 yrs, then $200 5 years!; 2nd defendant owed $13,843 and debtor joined federal program to make payments.

11-01078-KAO Filed 1-21-2011 (Jorgensen) lost at trial on 10-18- 2011. Owed over $115,000 but one child at home and net for over $4,900 monthly but no social security; Settlement with one defendant owed $33,000 settled for $15,000 payable at 2% and $96.83 a month for 15 yrs. Debtor attorney also case.

11-01246 Filed 3-18-2011 (Morse) owed $53,208. Trial Feb.28, 2012, decision 3-9-12 Lost! Court ruled debtors’ child’s father in future should pay more in support and other such that payments could be made.

11-01938 Filed 9-28-2011 (Lee). Many defendants. Default judgments against many. Settled with last 2 defendants: Aug. 29, 2012 court approved settlement of which Lee owed $66,569 , settled with ECMC for $42,900 payable at 0% interest (reduced from 6.75% and 2.36%), and $25.00 for 5 yrs, then $110.00 for 5 yrs first payment due 9-1-2012!; Aug. 8, 2012 court approved settlement with other defendant Sallie Mae Inc. owed $118,733 and settled for $65,000 payable at 3% interest (reduced from 13% or lower on others), and $274 monthly first payment due 2-1-2013!

11-01967 Filed 10-11-2011 (Lecksiwilai) Settlement approved by court July 2012: 1 defendant: ECMC: Owed $18,247 at 6.8% interest, settled for $15,000 reduced interest to 3.4% payable at $25.00 month till 9-1-2017, then increase to $90 monthly; owed 2 defendant Sallie Mae approx. $49,000 at $291 monthly with an interest rate of both 9.75% and 4.75%, settled for $30,000 at 3% fixed, at $142 monthly for 300 months with first payment due 1- 2013;

11-02115 Filed 11-29-2011 (Thompson). Owed $305,534 in Federal loans, Great settlement! 4-13-12 court approved settlement discharging $246,657 and remainder of $58,877 not discharged but payable at zero % and at $50 a month on debtor who is 58 yrs old and able to still join WD Ford program too.

12-01121-TWD Filed 2-16-2012 (Poursayedahmed) owed over $441,026 to 2 defendants: Great settlement Oct, 2012 with $407,286 Discharged!!! : will pay $16,740 over 29 yrs at 0% at $25 a month for 9 yrs and then $58.50 for 20 yrs (had owed $171,121 with monthly payments of $1,215; 2 defendant: $17,000 payable at $54.68 for 30 yrs at 1% (was $1,922.77 monthly and owed $269,905).

12-04086 Filed 3-7-2012 (Patterson) Settlement 11-12! Owes $71,684 at 6.875% interest rate and $497 monthly payments. Settled 11-27, 2012 at $61,555 at zero 0% interest and $171 monthly payments. Net income of $3,200 with no dependants.

12-44784 Filed 11-7-12 Sullivan Great Settlement in April ‘13: Def #1: owed Wa State Univ. $4,375 settled at $1,000 payable at $20 a month (was $127.72 monthly) and 5%; Def #2: US Dept of Ed: her: owed $39,209 settled for $27,000 payable at $75 month (was $499.85 monthly) and at zero 0% interest; Def #3: Sallie Mae: owed 2 loans: one for $17,894 and one $19,067, settled for $17,000 payable at $103.02 monthly at 4% interest (was $331 monthly).

12-01985 Filed 11-7-12 Magus Settlement April 2013: Owes over $400,000: Def #1: ECMC is owed by her $121,373 and him $231,580, agreed to $20,000 reduction for entire balance owed, before monthly payments were $1981 , and after both together only $210 on IBR plan; all other various defendants all defaulted so only 2 creditors left owed to; stipulated order to discharge $16,103 entered against Discover.

Feb. 27, 2015: 9th Circuit US Court of Appeals 2:11-cv-01263-RSL  issued memorandum decision upholding the trial court win  in In Re Kelly 12-35377 above! The 9th Circuit reversed the District Court Judge who had overturned the Trial Judge’s decision and thus reinstated the partial discharge as ordered by the Bankruptcy Judge!

15-04103 Filed 7-16-15 (Bishop) Owed over $204,000; Great resolution Settlement 2-16: discharged $2,165 one loan, will enter program to pay $260 monthly on balance of over $200,000 and upon retirement, monthly estimated to reduce to zero dollars paid monthly (age 59) now;

16-04021 Filed 2-24-16 (Owen) Owed over $120,000. May 2016 case resolved. Discharged $103,000 in one loan; dismissed 2nd loan for approx. $18,000 to allow remaining payment monthly on Federal Program!

12-01985 Filed 11-7-12 Magus Settlement April 2013: Owes over $400,000: Def #1: ECMC is owed by her $121,373 and him $231,580, agreed to $20,000 reduction for entire balance owed, before monthly payments were $1981 , and after both together only $210 on IBR plan; all other various defendants all defaulted so only 2 creditors left owed to; stipulated order to discharge $16,103 entered against Discover.

2-27-2015 : 9TH Circuit Upheld Trial Win! A memorandum decision by the 9th Circuit Court of Appeals upheld the trial judge’s ruling partially discharging the student loans in 10-01681-MLB Kelly , thereby overturning the District Judge’s reversal of the Trial Judges Decision and thereby reinstating the DISCHARGE!! 2-11-cv-01263-RSL is 9th Circuit case number!

15-04103 Filed 7-16-15 (Bishop) Owed over $204,000; Great resolution Settlement 2-16: discharged $2,165 one loan, will enter program to pay $260 monthly on balance of over $200,000 and upon retirement, monthly estimated to reduce to zero dollars paid monthly (age 59) now;

16-04021 Filed 2-24-16 (Owen) May 2016 both debts resolved: Owes over $120,000. May 2016 all resolved: Discharged $103,000 about in one loan ; dismissed 2nd loan for approx $18,000 to allow payment monthly on Federal Program

16-04122-MJH (Coplin) Pro-Se Filing. Trial was 10-31-17; Discharged over $200,000 in student loans.

16-43787 Filed 12-2016 (Rush) Settled. 2 defendants resolved, other 2 into federal program pending.

17-01158-CMA Filed 9-22-17 (Hewes) Trial set for November 2018 ,Settled October! Discharged approximately $125,000 out of about $150,000!

18-01005-CMA Filed 1-24-18 (Linn) Settlement . Saved over $200,000 in student loans
including interest.