Can anyone help me with a question about Disability and student loan forgiveness?

[LeftofObama]

I have been getting disability since 4/2011 and they have been taking 15% of my check for my student loans. I was looking for a site that would help me apply for student loan forgiveness and I found this one:

https://www.disabilitydischarge.com/Application-Process/

For some reason I was under the impression that I had to be on disability for 5 years to qualify for student loan forgiveness, but this website doesn't say anything about that.

I called the number listed on this site and they are sending me the forms to fill out. They also say that I will receive a form 1099C and I will have to claim the forgiven amount as income.

I found another site that says I can claim insolvency so that I don't have to pay taxes on the forgiven amount. That site is here:

http://blog.credit.com/2012/04/cancelled-student-loan-debt-creates-tax-nightmare-55658/

So my questions are:

1. Do I have to wait 5 years to apply for student loan forgiveness?

2. Can I claim insolvency so that I don't have to pay taxes on the forgiven amount?

3. Does anyone know of a credible website where I can get more information?

This is getting to be very confusing and it's driving me crazy.

Thanks in advance for your help.

[PoliticAverse]

1. What specific type of student loan do you have?

See: https://studentaid.ed.gov/sa/repay-loans/forgiveness-cancellation/disability-discharge

(which links to the disabilitydischarge.com website you've cited)

I believe the 60-month (5-year) figure you mentioned only applies if you aren't on SSDI but
have a physician-certified disability.

[LeftofObama]

3. Just a Perkins loan I think, but it's been so long ago I may have gotten more than one.

[PoliticAverse]

5. A Perkins Loan is a Federal Loan that qualifies for discharge... Since yhou are on SSDI...

all you need to do to prove disability is:

If you are receiving Social Security Disability Insurance (SSDI) or Supplemental Security Income (SSI) benefits, you can submit a Social Security Administration (SSA) notice of award for SSDI or SSI benefits stating that your next scheduled disability review will be within five to seven years from the date of your most recent SSA disability determination.

(Source: https://studentaid.ed.gov/sa/repay-loans/forgiveness-cancellation/disability-discharge )

[PoliticAverse]

2. Insolvency...

From: http://www.irs.gov/publications/p4681/index.html

(see the "Insolvency Worksheet" in the document)...

Insolvency

Do not include a canceled debt in income to the extent that you were insolvent immediately before the cancellation. You were insolvent immediately before the cancellation to the extent that the total of all of your liabilities was more than the FMV of all of your assets immediately before the cancellation. For purposes of determining insolvency, assets include the value of everything you own (including assets that serve as collateral for debt and exempt assets which are beyond the reach of your creditors under the law, such as your interest in a pension plan and the value of your retirement account). Liabilities include:

The entire amount of recourse debts,

The amount of nonrecourse debt that is not in excess of the FMV of the property that is security for the debt, and

The amount of nonrecourse debt in excess of the FMV of the property subject to the nonrecourse debt to the extent nonrecourse debt in excess of the FMV of the property subject to the debt is forgiven.

You can use the Insolvency Worksheet, found later in this publication, to help calculate the extent that you were insolvent immediately before the cancellation.

[LeftofObama]

4. Thank you for that!