My Son Has Paranoid Schizophrenia and Student Loans We Need to Deal With

Question:

Dear Steve,

It’s regarding my son James. He is 44. He was diagnosed as a paranoid schizophrenic when he was 17. Many hospitalizations and has been on antipsychotic medication since. He graduated from college 15-20 years ago. I paid. He has borrowed about $56,000 from the Feds and about $3,000 from a private bank. He has had two short-lived jobs (one he just left for stress-related reasons) and one decent job tutoring. About 80% of his income over the last ten years is from Social Security Disability. He is now receiving $1,180 per month in SSI and no other income. His expenses amount to about $1,800 per month. Assets of $4,000 and liabilities of $65,000. Like you (a little shorter though) I have filed the paperwork both for the bankruptcy and the adversary complaint. I have Power of Attorney for any bankruptcy related matter.

1. Did you have a trial on the adversary complaint?
2. My son nor I can afford an attorney or to pay for expert witnesses.
3. What kind of evidence of mental illness would be needed if it went to court? Can my wife give a complete history of his hospitalizations, medicines etc
4. My son has no concept of money.
5. want to state somewhere on the complaint or in the trail that his future is dependent on the discharge of the debt. He needs hope.

Please help.
Thank You,
Tom

Answer:

Dear Tom,

The first route I would suggest pursuing is a Total and Permanent Disability (TPD) discharge for his federal loans.

It has become less of a total and complete pain to pursue forgiveness of loans under TPD. However, you should expect an inefficient process you will have to stay on top of.

The government website says:

How do I demonstrate that I am totally and permanently disabled?

You can demonstrate that you are totally and permanently disabled in one of the following three ways:

1 – If you are a veteran and we have received information from the U.S. Department of Veterans Affairs (VA) indicating that you have a service-connected disability (or disabilities) that is 100% disabling or that you are totally disabled based on an individual unemployability rating we will contact you and explain how you may apply for a TPD discharge, but you will not need to provide documentation of your VA determination. We regularly receive information from the VA identifying veterans who may qualify for TPD discharge. If you are a veteran and you have a service connected disability (or disabilities) that is 100% disabling or are totally disabled based on an individual unemployability rating, but we did not contact you about a TPD discharge, you can apply and provide documentation from the VA showing that you have a service connected disability (or disabilities) that is 100% disabling or that you are totally disabled based on an individual unemployability rating, that includes the effective date of the VA’s determination.

2 – If we have received information from the Social Security Administration (SSA) indicating that you are receiving Social Security Disability Insurance (SSDI) or Supplemental Security Income (SSI) benefits and that your next scheduled disability review will be within 5 to 7 years from the date of your most recent SSA disability determination, we will contact you and explain how you may apply for a TPD discharge, but you will not need to submit documentation of your SSA disability determination. We regularly receive information from SSA identifying individuals who may qualify for TPD discharge.

If you receive SSDI or SSI benefits and your next scheduled disability review will be within 5 to 7 years from the date of your most recent SSA disability determination, and we did not contact you about a TPD discharge, you can apply and provide documentation of your SSA notice of award for SSDI, SSI benefits or a Benefits Planning Query (BPQY form 2459) stating that your next scheduled disability review will be within 5 to 7 years from the date of your most recent SSA disability determination.

3 – You can submit a certification from a doctor of medicine (M.D.) or osteopathy (D.O) who is licensed to practice in the United States that you are totally and permanently disabled. Your physician must certify that you are unable to engage in any substantial gainful activity by reason of a medically determinable physical or mental impairment that:

● Can be expected to result in death;

● Has lasted for a continuous period of not less than 60 months; or

● Can be expected to last for a continuous period of not less than 60 months.

Each option for showing that you are totally and permanently disabled has specific requirements regarding the supporting documentation that you must submit with your TPD discharge application. To review the supporting documentation requirements, click here.

Your Son Seems to Be Eligible

Since your son already has a SSDI determination he would seem to qualify under option 2 but he may also qualify under option 3 since his condition has lasted more than 60 months and can be expected to last for at least another 60 months.

You can read how to apply for a TPD discharge for federal student loans here.

Frankly, I’d pursue this route before leaping for an attempted discharge in bankruptcy with an Adversary Proceeding.

Steve Rhode
Get Out of Debt GuyTwitter, G+, Facebook

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This article by Steve Rhode first appeared on Get Out of Debt Guy and was distributed by the Personal Finance Syndication Network.