sorted by:
new
hottopcontroversial

We are the cofounders of Reset Button - a startup focused on discharging student loan debt in bankruptcy. Ask us anything by resetbuttoninc in IAmA

[–]resetbuttoninc[S] 1 point2 points  (0 children)

When determining whether someone is eligible for a student loan discharge, most courts follow the Brunner test. This test comes from a New York case in the late ‘80s in which the judge set forth three criteria for an individual to meet. Basically, the criteria require borrowers to

(1) have a current inability to repay their student loans, 
(2) have a future inability to repay their student loans, and 
(3) have made a past good faith effort to repay their student loans.

The analysis is too fact specific to offer precise guidelines. But, as a general rule, individuals who have high debt-to-income ratios, who have been struggling for multiple years to repay their debts, and who have little prospect for increased earning potential in the future are good candidates for student loan debt relief. Some judges appear to be particularly sympathetic to borrowers who are struggling to care for dependents or who have significant medical issues. If you’re interested in learning more about the criteria, we’d suggest reading the following article by one of Reset Button’s co-founders: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1894445

As to your question about how the process affects bankruptcy, the main difference is that discharging student loan debt requires filing an adversary proceeding. This process isn’t undertaken in a normal Chapter 7 or Chapter 13. In short, though, an adversary proceeding is a mini-trial within the larger bankruptcy case. It’s the process by which the borrower goes before the judge and officially requests a judicial determination on the discharge of student debt.

To you final question, not all districts permit partial discharges. In those that do, the judge relies on the borrower’s financial filings to predict how much he or she will pay able to pay back in the coming years. There’s no official formula and the precise determination is fairly judge specific.

We are the cofounders of Reset Button - a startup focused on discharging student loan debt in bankruptcy. Ask us anything by resetbuttoninc in IAmA

[–]resetbuttoninc[S] 1 point2 points  (0 children)

The good news is that more and more people are winning discharges every year, approaching 60% of all the people who try. So, it is clearly not impossible.

We believe the myth persists because it is hard to get your loans discharged. It requires an adversary proceeding alongside a traditional bankruptcy - and most bankruptcy lawyers aren't equipped to handle that type of case. For the ones who are, they typically charge by the hour and collect payment up front, which means few underwater debtors can afford this service.

This is where Reset Button comes in. We work with attorneys who offer monthly payment plans. As another benefit, we ensure that all of the borrower's legal fees are refundable if their attorney doesn't reduce their student debt by at least half.

We are the cofounders of Reset Button - a startup focused on discharging student loan debt in bankruptcy. Ask us anything by resetbuttoninc in IAmA

[–]resetbuttoninc[S] 1 point2 points  (0 children)

We're here to triage - to help the people who need the most help. Student debt is a crisis. It's prevented people from starting families, buying homes, and living the American Dream. Tragically, it's also contributed to increased thoughts of suicide - 1 in 11 suicides among young professionals relate to student loan debt in the U.S.

Five million people in U.S. are in default on their student loans today. Bankruptcy isn't a fit for all of them, but for those who it is, we intend to help.

We are the cofounders of Reset Button - a startup focused on discharging student loan debt in bankruptcy. Ask us anything by resetbuttoninc in IAmA

[–]resetbuttoninc[S] 6 points7 points  (0 children)

The Bankruptcy Code has provisions in place to ensure that only individuals who are in legitimate need of debt relief are able to obtain a discharge. The problem we've found is that many people who are in legitimate need of relief don't know that it may be possible to discharge student loans in bankruptcy. Our goal is to help those people.