The situation, as reported by a friend of mine (no, it's not me, it really is a friend):

She racked up about $50K in government-funded educational loans. Once she got settled and got into a decent job and they started coming due, she got a consolidation loan from a private lender. Thus, the debts that were actually government-backed were, as far as she knows, paid off.

Then the bottom dropped out of the economy and suddenly the decent job wasn't there any more. Between the school loans and some credit card debt, she's considering bankruptcy, and it's looking more and more likely.

The question: since those educational loans are now held by a private lender and as far as she knows aren't actually government-connected any more, are they dischargeable under bankruptcy? She wound up paying on them for less than a year, and she's afraid that either 1) they won't be eligible for discharge since they were originally government, and of course the government exempts itself from everything, or 2) the private lender will cry "foul" and accuse her of something resembling fraud.

This situation is in Idaho, if that makes any difference. Opinions? Applicable laws?

Nothing??

I'll PM a few experts who might know.

We are all volunteers - please give us a chance to answer - and, thanks, Wondergirl.

Any creditor can always make an argument that a debt was discharged in anticipation of bankruptcy and getting it discharged. The question is will the creditor and can they prevail?

She should look at her loan papers - I've seen student loans discharged by a consolidation loan but I've also seen student loans active with the consolidation making the payments.

She has to review her papers and her Government loan discharge papers.

We are all volunteers - please give us a chance to answer - and, thanks, Wondergirl.

I understand that; I was just surprised that my question was up for a full week with no response at all.


Any creditor can always make an argument that a debt was discharged in anticipation of bankruptcy and getting it discharged. The question is will the creditor and can they prevail?

I'm not sure I follow. Could you expand this idea for me a little?


She should look at her loan papers - I've seen student loans discharged by a consolidation loan but I've also seen student loans active with the consolidation making the payments.

She has to review her papers and her Government loan discharge papers.

The government loans weren't discharged, they were paid by the entity that gave her the consolidation loan. Or does that qualify as "discharge" in this case? I'm confused (as if that's anything new).

We all miss a question sometimes, as we go though pages of questions every day. Sorry,

It can be either way, often what we think of as a "private" lender doing the consolidation is really backed by the government under a federal program that is set up for the consolidation. So you may have to look at the paper work and perhaps even talking it to the attorney. The fraud issue should not have any bearing

We all miss a question sometimes, as we go though pages of questions every day. Sorry,

No biggie, I was just a little confused. Granted, it takes virtually no effort to put me in that state...


It can be either way, often what we think of as a "private" lender doing the consolidation is really backed by the government under a federal program that is set up for the consolidation. So you may have to look at the paper work and perhaps even talking it to the attorney. The fraud issue should not have any bearing

Okay, I see what you mean. I'll tell her to check that out. Thanks!