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Encumbering asset with student loan debt

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Let me restate question:

It is well known that an asset encumbered by debt is less attractive to potential plaintiffs.

A debtor has an income producing asset, and two different creditors.

If the debtor can encumber the asset with the debt to one creditor, then that should provide protection against the other creditor.

In this case, one debt is a federal student loan, and the other is credit card debt. The student loan represents a far more dangerous creditor. Therefore, the concept is to encumber the asset with the student loan debt, which in any case must be repaid. The asset is an income stream, for which the debtor has the authority to reassign. The student loan debt is in deferment, and is not in immediate danger of default. The credit card debt is defaulted.

Is this feasible?

Are are there any suggestions on how to approach the student loan people on this matter?

Are there any downsides to this concept?

Any other suggestions/comments?

Edited by Happybluesky
Responders fount original vague
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Although, you may be able to structure a chapter 11 or 13 that allows you to repay your creditors without being forced into liquidation. Do the other creditors know about the asset? Let me take a wild guess. (I'm good at this) You have a Bank One or similar credit card debt in default, or some other student related debt and you think that if you are sued they will find this asset. That takes a long time to do. They have to sue and win first, and get a judgment. Then they have to submit you to post judgment discovery to find the asset. It would be a shame if that asset wasn't in your name any more, wouldn't it? Also, homestead and other exemptions apply. You may want to throw this to KentWA, he knows your area well. That aside, if the asset produces sufficient revenue to eventually satisfy all creditors, there should be no problem. An asset protection attorney or estate planner may be beneficial. Post a little more info, this is kind of vague.

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