The hardship law is bullshit. It should be removed. Tried to enforce the Soldier' and Sailor Releif Act for a cap of 6 percent which Sallie Mae denied, and which The Department of Ed. states does not apply to Any student loan that is insured by the Federal Government. which my loan was. It was Not a Guaranteed Student Loan. They wrote their laws in Congress to prevent students from filing bankruptcy easily because it had been abused. If you become a physician, and do not pay they will take you out of the Medicare program. I can not believe I live in a country with No legal recourse. No rights in regards to previous statues of the law, that applies to everyone in America, including murderers. except us!
I find this web site a great release, if not anything else. I have sent out my last letter to their lawyer stating "do what you have to do". I will not practice medicine during the day, and scrub floors at night. And I will not live at the poverty level to pay them. I am entitled to a certain standard of living. I think I found one loop hole in their law, though. I'll let everyone know if I'm right. Don't want to mention it on here. Sallie Mae may be watching. We need to concentrate on contract and financing laws on this one. I think I will go out and buy a toliet seat for $39,000 and in 20 years it will be worth $189,000. Only happens to Sallie Mae! In closing, IF ANYONE KNOWS A LAWYER THAT WOULD LIKE MY CASE POST IT. In closing, LET'S GET THIS LAWSUIT STARTED!

Debtors CAN file bankruptcy only with regard to selected debts. Debts not included in the bankruptcy filing are not discharged.

The standard for discharge of HEAL loans is even higher than the high "undue hardship" standard established under bankruptcy court decisions (which, by the way, is a significantly higher standard than the definition of "hardship" defined by Congress in the Higher Education Act). The standard for discharge of a HEAL loan is that "... the non-discharge of such debt would be unconscionable ..." (see the excerpt from the HEAL agreement below). An unconscionable result is a higher standard than a result imposing an undue hardship on a debtor.

The new and "improved" bankruptcy laws now make it even more difficult for student loan borrowers to obtain discharge of student loan debt. A Chapter 13 discharge of a portion of the accrued interest is likely to be a best-case scenario. Meeting the HEAL "unconscionable" standard has proven extremely difficult for borrowers to meet. There are legions of student loan debtors who have "thrown good money after bad" unsuccessfully seeking discharge of student loan debts in bankruptcy. Be suspicious of any bankruptcy attorney who suggests your prospects for success are good. Quiz any prospective attorney regarding the "unconscionable" standard applicable to HEAL agreements. If you perceive any lack of competency by the attorney related to the interpretation of this standard by the bankruptcy courts, look for another attorney. Always avoid "know-it-all" attorneys who want you to believe they know all about the law regardless of the question presented.

HEAL loan agreements set forth specific limitations on the availability of discharge under bankruptcy law. Here is the applicable section from the "student responsibilities" section of the agreement:

"...
7. Under current law, I do not have the right to have my loan discharged in bankruptcy during the first 7 years of the repayment period. This prohibition against the discharge of a HEAL loan applies to bankruptcy under any chapter of the Bankruptcy Act, including Chapter 13. I may have a HEAL loan discharged in bankruptcy after the first 7 years of the repayment period only, excluding any periods of forbearance and deferment, upon a finding by the Bankruptcy Court that the non-discharge of such debt would be unconscionable and upon the condition that the Secretary shall not have waived his or her rights to reduce any Federal reimbursements or Federal payments for health services under any Federal law in amounts up to the balance of the loan. Any changes in the HEAL statute regarding the discharge of a HEAL loan in bankruptcy will apply to this loan.
..."

The HRSA/BHPR has some miscellaneous information regarding HEAL loans and bankruptcy available that you might want to review:

http://bhpr.hrsa.gov/dsa/heal_policy/FY00/Fy00L01.htm
http://www.defaulteddocs.dhhs.gov/
http://bhpr.hrsa.gov/dsa/sfag/health_professions/6healcor-02.htm
http://bhpr.hrsa.gov/dsa/heal_policy/FY99/Fy99L02.htm

I filed for bankruptcy in Dec. 2004.
I had met with an attorney in June 2004 and discussed my student loan problems with him ($150,000 with salliemae, 75% of it interest) and he told me we would declare BK and file an adversarial proceeding. He meant well. The trouble is that family, civil, and criminal law doesn't seem to apply to the US dept. of Education or their "servicers". They have their own set of "law".
In August my attorney called me in to give me the news... even though all the statutes were there, an adversarial proceeding would not work, but he said the BK for other debts, credit cards, and medical bills would be discharged very easily, but not the student loans.

Well, I did not stop there. I consulted with 6 other attorneys and finally found one who was also a bankruptcy trustee for this state. He told me that I could file an adversarial proceeding under the undue hardship rule because I met all of the conditions for it due to some medical problems. He said we could get my doctor as a witness...
but he said even if the judge ruled in my favor, salliemae would appeal.
He said they would keep appealing on any decision in my favor because they do not want any precedences set because it would open the door to others for the undue hardship clause.

here is a good website about undue hardship: (copy and paste in your browser)

http://www.moranlaw.net/studentloans.htm

Good luck if you file an adversarial proceeding. I hope you win!

But IMHO the undue hardship stuff is not true.
It's another lie that we the people have been told. It gives false hope.

We need to rally for a class action lawsuit and make the gov't pay damages!

Good luck;
Dave