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private student loans are out of control, what are my options?

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jason0618
Frequent Contributor

Re: private student loans are out of control, what are my options?

Hmm, I need to transfer back to NC then...

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Message 11 of 16
webhopper
Moderator Emeritus

Re: private student loans are out of control, what are my options?

I hate to be the one to say this, but in your situation, I would declare Bankruptcy, but do not include NFCU, and Cap One in your bankruptcy. Federally gauraunteed loans are not bankruptable anyways...  

 

This is the sort of situation that everyone cringes to see...  Quite frankly, you don't have the money to give them what you owe. If you try, you will be doing so for the rest of your life and this will never go away.  I would consult with a financial advisor and an attorney if I were you.  I totally understand and appreciate that you are trying to do the right thing, but doing the right thing also means being able to feed and clothe yourself. If you're paying them 1900 out of 2800 that you make, its just not possible.

 

Edit: Just read on BK forum that private loans are no longer dischargeable...  

 

Have you tried sitting down with a Credit Counseling Service? They may be able to help you structure a payment plan.

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Message 12 of 16
jason0618
Frequent Contributor

Re: private student loans are out of control, what are my options?

Was just reading your reply and was going to say that, but then I saw your edit.

 

And actually, I did consider that, and my bk attorney was going to let me, until we discovered on our own that the loans wouldn't be able to be discharged.  I've not checked with any credit counseling services.  I'm open to any option, though.  PArt of me is hoping that with the TERI bankrutcy case that the whole thing will just go away, although I suppose I know better than that in reality...

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Message 13 of 16
BlueHusky
Contributor

Re: private student loans are out of control, what are my options?


@jason0618 wrote:

Was just reading your reply and was going to say that, but then I saw your edit.

 

And actually, I did consider that, and my bk attorney was going to let me, until we discovered on our own that the loans wouldn't be able to be discharged.  I've not checked with any credit counseling services.  I'm open to any option, though.  PArt of me is hoping that with the TERI bankrutcy case that the whole thing will just go away, although I suppose I know better than that in reality...


 

I don't know if you're still here Jason, but I would look into the bankruptcy a little more. I remember reading a long time ago that while it is VERY difficult to get student loans discharged in bankruptcy, it is not impossible if you can prove to a judge that paying them would cause "undue hardship."

 

Student loans are difficult, but not impossible, to discharge in bankruptcy.  To do so, you must show that payment of the debt “will impose an undue hardship on you and your dependents.”

Courts use different tests to evaluate whether a particular borrower has shown an undue hardship. A common test is the Brunner test which requires a showing that 1) the debtor cannot maintain, based on current income and expenses, a “minimal” standard of living for the debtor and the debtor’s dependents if forced to repay the student loans; 2) additional circumstances exist indicating that this state of affairs is likely to persist for a significant portion of the repayment period of the student loans; and 3) the debtor has made good faith efforts to repay the loans. (Brunner v. New York State Higher Educ. Servs. Corp., 831 F. 2d 395 (2d Cir. 1987). Not all courts use this test. Some courts will be more flexible, some less.

If you can successfully prove undue hardship, your student loan will be completely canceled. Filing for bankruptcy also automatically protects you from collection actions on all of your debts, at least until the bankruptcy case is resolved or until the creditor gets permission from the court to start collecting again.

Assuming you can discharge your student loan debt by proving hardship, bankruptcy may be a good option for you. It is a good idea to first consult with a lawyer or other professional to understand other pros and cons associated with bankruptcy. For example, a bankruptcy can remain part of your credit history for ten years. There are costs associated with filing for bankruptcy as well as a number of procedural hurdles. There are also limits on how often you can file for bankruptcy.

 

From: http://www.studentloanborrowerassistance.org/bankruptcy/




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Message 14 of 16
pkosheta
Contributor

Re: private student loans are out of control, what are my options?

This is a horrible situation... I am so sorry for all of your struggles. Over 167000 people in the U.S. have 200k+ in student loans including a few dear friends of mine, so you are not alone. honestly I do not know how to slay your dragon considering the interest rates probably on it. Drastic reduction in interest is the only way folks can pull it off unless they make high six figures. Unfortunately undue hardship is a very difficult legal claim to make, while common sense would make us conclude your situation is quite a burden, the court will likely not see your situation thru the same lens. You need to consult your legal advisor as to what counts as a undue hardship, think disabled veterans, bed ridden people, people who have developed severe mental or health problems. It can require extreme situations, not just its impractical to pay. But again if you want to pursue that talk to a legal advisor as I am not a BK attorney and can only offer my 2c. Perhaps challenge your status as a cosigner? Perhaps move to Canada? The latter is not a joke; many foreign countries will not recognize a debt without a SOL attached to it or cant be discharged in a BK type proceding and will thus not enforce them. Good luck man.
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Message 15 of 16
jason0618
Frequent Contributor

Re: private student loans are out of control, what are my options?

Thanks for the advice.  For now, I'm just weighing out my options.  Since they're private, there may be some solace in SOL expiration...  IF I move back to NC with their 3 years written contract SOL, am I right to think I'd be safe from liens, judgments, and the like?  That's what really sucks about being in Ohio.  15 year SOL here...  

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Message 16 of 16
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