Can you use chapter 7 filing to help negotiate terms with student loan lenders.. (garnishment in place for 7 years)

[reklaw67]

(FL) My salary has been getting garnished for $475/every 2 weeks for defaulted student loans. This garnishment has been in place for about 7 years. I've read there is little I can do outside of filing for bankruptcy at this point. With my wife and I income together I'm afraid we will not qualify for a chapter 7. Although we have a lot of debt our disposable income will probably be too much. Just wondering if one can file for chapter 7 (even if it will likely not be accepted) to stop garnishment. Was wondering if this could be done to then come to new terms with lenders for payment options. The $950/month really has limited our options these past 7 years and has us living much more paycheck to paycheck than we ever did before. Or are there any other options available other than quitting my job to get rid of very high student loan payments via garnishment? Thank you.

 

[Taxing Matters]

Or are there any other options available other than quitting my job to get rid of very high student loan payments via garnishment?

It is quite hard to get student loans discharged because you have initiate an adversary proceeding in the bankruptcy court and then prove that the not getting a discharge would create an undue hardship on you and your family. The test for that varies a bit depending on which bankruptcy district you file your petition, but they are all pretty difficult to meet. However, even if you cannot get a discharge the filing of the petition does result in an automatic stay imposed on your creditors. That would, at least for a short time, get the garnishment lifted. You might want to see a bankruptcy attorney to see if bankruptcy might offer you the breathing space you need and whether you'd have any realistic shot at discharge.

If your loans are federal government student loans, there may be other options to help you. The Department of Education covers those options here: https://studentaid.ed.gov/sa/repay-loans/forgiveness-cancellation