Student Loan Nightmare

Discussion in 'Credit Talk' started by commerceso, Jun 29, 2003.

  1. commerceso

    commerceso Active Member

    I'm a public school teacher that has an unbelievable student loan debt. Just about every student loan pitfall you can mention I have fell into. I finished college in 1995, my wife and I consolidated
    our loans together at a total of $62,000 and I went into business on my own. Business was good and bad, I landed a federal contract worth 4 million dollars, but when the contractor went belly up, they
    took me down with them. I only completed 1/4th of the contract but had all the expense out of gearing up for it. To make a long story short I closed the business and filed for Bankruptcy in Nov 2002. I
    was only able to make a few payments during the past 8 years and my student loan debt now sets at 115k. I'm currently employed as a high school teacher. I bring home about 1800 per month. The
    interest alone on my student loans is almost half of my take home pay. Now, other than throwing myself on my sword or leaving the country, how do I take care of this problem?

    Are there any student loan reform plans? Are there any options that I am not aware of?
     
  2. too much

    too much Banned

    You could apply for a hardship discharge of the debt, but it's very very unlikely to happen. You could also apply for forbearance, but the interest will still add up while you're not paying.

    Aside from that, leaving the US doesn't sound too bad. Seriously. Maybe saving up some money and heading to Australia or Europe would be fun....
     
  3. jpreston51

    jpreston51 Active Member

    Yes, you can have your student loans includedin your Bankruptcy if you can demonstrate that they will cause you hardship. I think that is the case here!!!

    Apart from that, pack your bags and head to the airport. The US is a ****ed country. Its just an amusement park. I ask you, who indebts its citizens like this just to learn. What a **** up!!

    JP
     
  4. kit

    kit Well-Known Member

    double post
     
  5. kit

    kit Well-Known Member

    UMMM... no need to leave the country. If you can get your student loan included in BK, then I would go that route... but its difficult I think. Otherwise, there are loan rehabilitation programs that will help you. They can set you up with an income sensitive re-payment plan. Check into rehabilitation here:
    http://www.fsahelp.ed.gov/ombudsman/rehab.html

    Also, you are a teacher, correct?? So if you work in a low income district you may be eligible for cancellation of Perkins loans...
    http://www.fsahelp.ed.gov/ombudsman/cancellation.html.

    Also, here are the requirements for declaring student loan in bankruptcy... they are stringent:

    Bankruptcy
    If you filed Chapter 7 or Chapter 13 bankruptcy after October 7, 1998, you may have your loan discharged only if the bankruptcy court finds that repayment would impose undue hardship on you and your dependents. This must be decided in an adversary proceeding in bankruptcy court after the conclusion of the bankruptcy. Your creditors will be present to challenge the request. The court uses a three-pronged test to determine hardship:

    If you are forced to repay the loan, you would not be able to maintain a minimal standard of living.
    There is evidence that this hardship will continue for for a significant portion of the loan repayment period.
    You made good-faith efforts to repay the loan before filing bankruptcy (usually this means you have been in repayment for a minimum of five years).
    Your loan will not be discharged if you are unable to satisfy any one of the three requirements. If your loan is discharged, you will not have to repay your loan, and all collection activity on these loans ends. You would also regain eligibility for Title IV student loans. To get your loan discharged for reasons of bankruptcy, you must petition the bankruptcy court to reopen your case.
     
  6. kit

    kit Well-Known Member

  7. commerceso

    commerceso Active Member

    I have already consolidated these loans. They are stuck at a whopping 9% interest. I mean, if I could get the 3% that they're giving now there might be a chance some day, but right now no. $115k at 9% over 30 years is $925.32 per month(over half my income). $115k at 3% is 484.84--still high but MUCH more doable. My bk has been discharged. Does anyone know if it is possible to reopen the bk to apply for the student loan discharge?
     
  8. too much

    too much Banned

    Don't listen to the people here who tell you that you can include student loans in bankruptcy. They're mostly wrong.

    Technically, it's possible, but it almost never happens. Student loans are exempt from bankruptcy discharge in all but the most extreme cases. Unless you're completely unable to work, dying, etc, you cannot get a discharge for those loans in BK court.

    Are you disabled? Terminally ill? Have a terminally ill or disabled child or spouse? Those are the only reasons why you'd get a discharge for them.


    I hear Canada is nice....
     
  9. Flyingifr

    Flyingifr Well-Known Member

    Re: Re: Student Loan Nightmare

    Actually, the poster may have a strong case for a hardship discharge, in part. The debt has grown so large that, in his own words, it eats up half his take home pay. Teachers are notoriously underpaid and are not liekely to get large raises. A smart BK attorney may be able to make the point that under its present terms this debt will never be repaid and therefore partial relief is appropriate.

    Canada would be a poor choice. The US-Canada Tax treaty allows each country to collect the tax debts of the other. How about Brazil? Does the poster speak Portugese? Brazil has neither a Tax treator nor an Extradition treaty with the US.
     
  10. too much

    too much Banned

    Re: Re: Re: Student Loan Nightmare

    I was kidding about Canada--

    $60,000 in student loan debt isn't a hardship to someone who can make $40k+ a year...especially in a 2 income family. At least not in the eyes of the Gov't.

    They have their whole lives to pay it off.
     
  11. marci

    marci Well-Known Member

    Re: Re: Re: Re: Student Loan Nightmare

    Maybe, but $115K for a person BRINGING HOME $1800 (translate $35K) is quite a lot. Learn to read carefully before replying.

    _____

    To the original poster,

    I'd look into a hardship discharge or a loan forgiveness program for teaching in underserved areas. Or I'd look into you and your wife both getting a second job.

    The worst case:

    They will not put you into jail. But they will take your tax returns and garnish your wages up to 25% of your *disposable* income (depending on your state) until the loan is paid off or until you retire at age 67.

    Your BK attny. should have talked to you about this when you filed in November 2002. If there can be an amendment to that filing, I certainly would look into it.
     
  12. too much

    too much Banned

    Re: Re: Re: Re: Re: Student Loan Nightmare

     
  13. jlynn

    jlynn Well-Known Member

    What a jerk.
     
  14. marci

    marci Well-Known Member

    Yes.
     
  15. too much

    too much Banned


    I'm a "jerk" because I suggest that the poster get rid of the interest by working out something with the lender? The principal was, according to the post, $62k. Why in the world would they pay $115k, when they could negotiate it lower?

    You sound like another board "expert."
     
  16. jpreston51

    jpreston51 Active Member

    Just hit the road. Come down here to Australia where education and health care are free, high quality and universal. Quit dealing with the hot cock pedallers up there!!!



    Give me your indebted, your pissed off and guys who cant get a hip replacement, we will give them shelter.
     
  17. too much

    too much Banned

    Re: Re: Student Loan Nightmare

    Brilliant comeback....
     
  18. marci

    marci Well-Known Member

    To the original poster,

    Notwithstanding "too much's" arrogant idiocy, she/he does make a valid suggestion among many that people have posted here.

    Here are some options. I think you should explore them all:

    1. Put all of your student loans into hardship deferment with your servicer now for at least 12 months. Hopefully, your servicer's hardship program will not allow interest to accrue. This buys you some time to research the following:


    1. Income contingent repayment plan on the $115K with the servicer. Granted, you probably will not ever pay the loans off this way, but you will stay out of default and the loans will be forgiven in full when you retire.

    2. Loan forgiveness program for teaching in underserved areas. I would really research every grant program out there to see if you qualify for something like this.

    3. US Dept. of Education Ombudsman's Office to negotiate a repayment plan and decrease accrued interest (I've not heard of this, but it may be a possibility worth looking into). Here is the website:

    http://sfahelp.ed.gov/ombudsman/index.html

    4. Call your BK attorney and ask about a formal hardship forgiveness option via BK. You probably need to go to several sources and do some research to see who has done this and under what circumstances. It is difficult to do, but it can be done.

    5. Look into all of the above, and if you can get some of the loans or interest forgiven, but not all, then look into getting a second job AND doing the income contingent repayment plan.

    Whatever you do, DO NOT allow the loans to default. So, put them into hardship deferment NOW before they default. If your servicer says that you don't qualify for hardship deferment, then put them into general forbearance (interest accrues, but at least you can research your long term options).


    I hope it works for you,
     
  19. blueeyes_a

    blueeyes_a Member

    I'd like to follow up what Marci said...reconsolidate with DIRECT LOAN (run by the federal government) and sign up for the income contingent repayment plan. After 25-30 years of ICR payments the debt will be discharged regardless of the principal remaining.
     
  20. marci

    marci Well-Known Member

    Yes, exactly.

    I was going to advise you to reconsolidate with Direct Loans. They have a true general forbearance that is incredibly easy to get, if a hardship deferment isn't approved (in your case, I know it will be, though).

    I am doing an ICR with Direct Loans and they are very good to work with. Thanks re the info on the 25-30 year cut off for repayment. I thought it was until you hit 67.



    http://www.ed.gov/DirectLoan/

    http://www.dlssonline.com/index.asp
     

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