Collection Law & Medicaid/ssi

[Akavya]

Mr. Ebert, I recently been awarded Medicaid Food Stamps and in the process of filing for SSI. I have been unemployed for several months due to a physical disability. I had a doctor diagnose me with a permanent disability which prevents from seeking full time employment for at least a year. I have received notice that a student loan has been placed with a collection agency demanding that I pay off the full balance. I do not have any other assets to use to pay off this debt and I worried if they try to freeze my checking account or prevent me from receiving funds from the government. What steps or processes could I take to defer the debt until I can be able to work again? Could the collection agency prevent me from getting SSI from the government?

[Travers]

Hello Nicholas:   

The short answer to your question regarding whether you can keep your government payments or not if the collection attorneys come after you is that there are some exemptions that apply to your funds, but it could still be a problem because if they went after your bank accounts, you would have to file papers to get a hearing on the exemptions, get a court order releasing the funds, etc., which takes time and in the meantime you don't have access to your funds.    

Despite what you may have heard, if you determined to file for bankruptcy protection, it is possible(especially in your situation because of your disability# to have those student loan debts declared to be dischargeable because of an undue hardship.    If it were me in your position, I would be looking to eliminate the problem at its root rather than just deal with the collection attempts every time that they happened.    If the debt is declared to be discharged,  you could also discharge any other debts you have for credit cards and medical bills.   The problem with bankruptcy is not what you might think -  it is not because of credit -  in your situation having a bankruptcy on your record would be better than  continuing debt and collection efforts.   The real problem with a bk filing is simply that it costs so much.    Most attorneys charge between one and two thousand dollars to do the simples of bankruptcies, and that doesn't even include the paperwork necessary to challenge your student loan discharge.    If I did it for you, I would charge you 250 for the bankruptcy and another 100 for the paperwork that would request the court to discharge your student loan debt #it is called an "adversary complaint").    I can't say for sure what would or would not happen in your case because you don't state enough facts in your question, but your present disability status would work in your favor and you would have a good chance to discharge that student loan debt.

This would be much easier to talk about on the phone.   I will not charge you just to talk on the phone.   You can call me anytime at this number:   915  261-3893   I look forward to hearing from you.