Get Rid of Student Loans (in USA)! For Those who are Disabled and Cannot Pay off Student Loan Debt

[Jennifer]

Did you know that there is a way out of your student loans in the United States? I never knew and just deferred them every year using the Income Based Repayment (IBR) Plan. None of the people I spoke to about my loans ever told me that getting rid of the loans entirely was an option. I receive SSI and cannot pay off my loans. I finally found some useful information and here it is:

Apply for the Total and Permanent Disability (TPD) Discharge.

Definition: "For total and permanent disability discharge applications received by loan holders before July 1, 2010, total and permanent disability is defined as the condition of an individual who is unable to work and earn money because of an injury or illness that is expected to continue indefinitely or result in death."
http://www.disabilitydischarge.com/Pages/Process.aspx?id=83&libID=104

We QUALIFY! They wont let you know about this because all they want is money. After you apply and if/when you are accepted you must wait 3 years (Conditional discharge) for them to review you again and if you still qualify then your loans will be given a Final discharge status.

Read through the link as there are financial requirements (basically have to stay at or below the poverty line) etc. Contact your loan provider on how to apply for this discharge.

Update:

Here's the website that shows you how to apply: http://disabilitydischarge.com/home/

Also its important to note that they only want to know about YOUR income. Not you parent's or your spouse's or anyone living with you. So if you aren't working and receive SSI or SSDI or if your taxable income is below the poverty line of a 2 person household for your state then apply for the TPD Discharge to help get rid of your student loan debt.

Each year you will get a letter in the mail asking if you worked for the past year. If not check "No" and send the letter back to them. You do not have to send proof of your disability status while in the monitoring period. If you did work but stayed below the poverty line of a 2 person household for your state then you show copies of your wages either by copies of your pay stubs, W2 etc.

Update:

Forgiven loans are considered taxable income. If the amount you owe is greater than your assets then you may be insolvent. Be sure to apply if you qualify. http://www.irs.gov/uac/What-if-I-am-insolvent?

Form 982 (to be filled out the following tax year):http://www.irs.gov/pub/irs-pdf/f982.pdf

News of people discharging loans and finding out it's taxable income: http://www.nytimes.com/2014/03/28/y...an-debt-for-a-tax-bill-from-the-irs.html?_r=0

 

[Jennifer]

My GP just agreed to help me fill out the forms to try and get me discharged from my loans.

All I did was bring the paper work with me to my appointment and ask her if she had heard of it before, she said no, so I told her that its for people who are unable to work to pay off their loans and after 3 years if you still qualify they completely absolve you from all payments and you no longer owe anything. It also must be filled out for each loan holder. So she said to make another appointment with her and we'll get to working on it. I see her next Friday.

Edit: Just so everyone knows, you don't already have to be considered disabled by the government or state or anywhere else. This is completely separate.

 

[LindaS]

I applied for this (before I went back to work). I didn't think you had to be at the poverty level, just be disabled. Maybe if it is for applications after 2010 you don't need to be at the poverty level?

 

[Jennifer]

This is all I've read regarding the poverty line from the same link above:

"Note about employment earnings: In accordance with the definition of total and permanent disability that was in effect before July 1, 2010, the physician cannot certify in Section 4 of the discharge application that a borrower has a total and permanent disability if, at the time of the physician’s certification, the borrower is able to work and earn money in any capacity in any field of work. However, if the borrower attempts to work during the conditional discharge period, the borrower may earn up to the poverty line amount each year during that period. This standard allows the borrower to try to work without being disqualified from receiving a final discharge. The poverty line amounts are updated annually. The Department will notify the borrower of the current poverty line amounts during each year of the conditional discharge period."

You should be at the poverty level if you aren't working. If you are working and make more money than the poverty line, then you don't qualify. I don't know what the qualifications were before 2010 though. Did you qualify when you applied in the past? Were you discharged?

 

[LindaS]

Oh. My private disability insurance paid well above the poverty level. That makes sense. I was out of work for about 7 months when I applied, but 2 weeks ago, I went back to work part time (with my insurance making up the difference in income). My loans are still on the forbearance from applying. As an attorney, I owe quite a bit from my education.

 

[Jennifer]

I went to a private art school for my Masters in sculpture and graduated in 09. Interest is piling and I didn't know what to do when I got two letters in the mail from different loan holders (cause my loan split resulting in retarded amounts of money) and if things keep going the way they are, I'll never ever be able to pay them off unless I win the lottery. I sent one of them an email pleading for help and told them I had nothing to give them (no car, no house) and that I receive SSI. I asked them if they would like to break my legs or have my first born but they sent me these discharge papers instead that I knew nothing about.

 

[Rampage]

You should also checks with your tax advisor. Discharge of debt in the U.S. is generally considered taxable income. There are some ways of avoiding the income (such as insolvency). However, you want to be clear or you may end up with a debt to the IRS.

 

[Jennifer]

Mine was accepted months ago so just wanted to add that thread here and bump this thread so more people are aware of possibly getting rid of their student loans. http://www.crohnsforum.com/showthread.php?t=40072

 

[Jennifer]

Got my first letter in the mail asking about my working status. I talked to a representative over the phone asking them if I needed to also report my husband's wages as I got married last year and they said no. They only care about MY wages. I still receive SSI and do not work so that's one year down, two more to go to be completely debt free.

 

[jwls]

Does anyone know if something similar exists in England? There are a lot of issues surrounding things like insurance too. I took on Standard Life and won, on my own with no outside help. They loaded my endowment policy with life insurance due to a supposed higher cancer risk as they had Crohns and Colitis in the same band, I sent them lots of information showing Crohns did not have the same risk and after a bit of an argument
I WON and they lowered my monthly payments.
Everyone should check all their policies for these loadings.

 

[Jennifer]

What I did jwls was talk to my student loan provider and was brutally honest. I told them that I received disability and don't work and cannot pay any payments at all because I need it for bills and food. That's when I was finally told about the permanent discharge. When I looked on their websites that information was nowhere to be found. Try calling them and ask if they have something similar to what the United States offers. If you find it then let me know and I'll share it in this thread as well.

 

[Dahnish]

Nope we get nothing in England Like that. Im studying pharmacy right now and no. Patients with crohns dont have a "disability" of course everyone circumstances are different, but they are individually assessed.

 

[Jennifer]

Received my final letter stating that all of my student loans have been discharged (the 3 year waiting period is now over). Next step will be dealing with the IRS as this forgiveness is seen as income for the next tax year. I do not have any assets so I'll update this process as I go through it.

 

[Axelfl3333]

I bet you get one of these daft official letters telling you the tax on zero is zero.

 

[Jennifer]

So taxes have come and gone. We decided to use H&R Block to handle the student loans. I tried getting free tax help from the local college but they refused because they didn't want to be liable if anything bad happened.

So we made an appointment with H&R Block. The first person we met with started our taxes and helped me apply for insolvency (because we have no assets and would qualify) and at the end we were going to be charged over $300 which is too steep for a disabled couple with no money. They suggested purchasing the online software that they use which was around $80 so we went that route. When we got home to do it ourselves, we had no idea what we were doing and got frustrated and canceled it and just went back to H&R Block to have them do it for us and just borrow money from a relative.

When we got back there we met with a different person who felt sorry for our situation. He had been doing taxes for over 30 years and spoke to us frankly about our situation and advised us to NOT FILE. He said that this type of loan forgiveness is so low on the radar for the IRS that we'll likely coast on by unnoticed. However, in the off chance that we are audited H&R Block will handle the audit at no cost to us. He said that an audit can take between 12-18 months so we're not fully in the clear but we did get his statement in writing and also took a video of the conversation in the off chance that H&R Block attempts to avoid handling it like we were told they would. In the end we paid them nothing and won't owe anything IF we're audited.

I can't say that I recommend going this route but if you do please make sure that this is still being handled by tax professionals to protect yourself in case you are audited.

 

[Jennifer]

Sorry I never updated. We were never audited and after mine was complete my husband also applied and had his loans discharged years later. No audit for either.