Student bankruptcy ICR plan is a nightmare for folks seeking a student loan
discharge. The court calculates the undue hardship as described here and if
the tests are in favor of the debtor then student loan is placed in dischargeable
loans. ICR plan lasts for 25 years. According to it, if the debtor's income
falls below Federal Poverty Guideline then he will not pay anything. But during
the months in which he has a disposable income then debtor will have to repay
the amounts specified by the ICR. Only the outstanding debts are discharged
during this period of ICR plan. One thing to note here is that the outstanding
debts discharged under ICR plan are treated as income by IRS. The income taxes,
therefore, apply on this discharged loan and will be due in the Student Bankruptcy.

Student Bankruptcy ICR plan is unfair for many people

There has been debate on this Student Bankruptcy plan as well. The Education attorneys have complained
that the ICR makes the student loan to become non-dischargeable
and it negates the undue hardship factor. In many cases people can follow the
ICR plan but for the people who are old the income tax payable on the outstanding
loans discharged after the repayment plan is still an undue hardship. It is
indeed, inappropriate for people who are older then 40. Debtors seeking declaring student bankruptcy
on their loans should have a proper answer to the Income Contingency
Repayment Plan. If the courts accept Student Bankruptcy ICR the debtor is in trouble.

Student Bankruptcy -- Filing the Bankruptcy and Adversary Proceeding

The rest of the procedure of Student Bankruptcy is followed just like bankruptcy
filing of bankruptcy chapter 7 except
the debtor files an Adversary Proceeding too. This proceeding is against the
Department of Education. Basically, it asks the court to review the loan as
an undue hardship. If the court accepts it then the student loan is discharged
through the bankruptcy chapter 7 filing.



A note able research

According to a research people who file their own adversary proceeding succeed
more in getting the student loans discharged then the people who hire an attorney.
The attorneys either don't bother to help in this proceeding or they take huge
fees. The attorney, however, will help you with the bankruptcy
steps forms, etc.

Student Bankruptcy -- Strategy to Follow

If your Student Bankruptcy case is on trail then you will probably lose. The reason is that congress
has been unable to state the undue hardship clearly. Due to this the courts
can judge this factor by different tests. The better tactic here would be to
renegotiate out of court. You should go to the Department of Education and settle
the loan just like banks do with debts. If the debt
settlement is achieved e.g. the loan is $20,000 and the settlement results
in $3000 payable over some years of time say $250/month for a year, then you
can go to the court and tell them about this settlement. You can now get the
loan discharged in the chapter 7 filing. In addition, this discharge will not
be reported to IRS because of chapter 7 filing and you will not have to pay
the income tax on discharged loan after the debt settlement amount of loan is
repaid. The good thing here is that the stipulation crested by you and the education
department is sent to the court without a trial and your chances of getting
it approved is considerably increased.

Student Bankruptcy -- Plan details

The person filing a Student bankruptcy case should prepare properly to answer the characteristics that are used to calculate undue hardship. The debtor must also prepare to argue for the ICR plan. A strong and aggressive stance is also needed to renegotiate the student loan with the department of education.

Different courts different steps during a Student Bankruptcy filing. The general steps are;

• Filing the Complaint with Proof of Service
• Status Hearing
• Mediation
• Pre-Trial Hearing
• Trial

Before Mediation you will have to negotiate with the education department. They usually take this as you cannot get undue hardship favor due to ICR plan. Don't stop here. Keep negotiating. There are many cases where the department of education will accept it as because at the trial if they lose then they lose all the money. You can also go directly to the department of education instead of filing Student Bankruptcy for renegotiation. Many a times, they renegotiate since keeping the dead loans in their system costs them a lot of money.