How bad can it get: beyond bankruptcy

[ArchStanton]

Hello,

This is not meant to be pessimistic, but rather a legit question: what happens when your debt far outstrips your potential earnings and even attempting a repayment plan seems impossible?

I have debt from college, credit card debt and tax debt, and possibly soon child support to pay. My income will never be able to keep pace unless I get lucky or go back to school. Even if I could arrange payments (which I have with the IRS, college lenders and some credit cards) I still have nothing left over to live off of.

I'm really wondering what can be done at this point short of working and having ALL of my money go to these various obligations. The hardest part is that the college loans are less likely to be renegotiated, which comprise of the majority of my debt. Its not like I owe 60k in credit cards, but 100k in college money.

Any thoughts are helpful. I imagine one would say "go talk to a debt counselor anyway". I know this, but I guess I'm just trying to air my thoughts a bit before I do. This is the first time I've made a somewhat public statement to this point, so maybe I just needed to hear it aloud.

[Never_Again]

With $100K in college debt, please tell me that you are a doctor or a lawyer, or some other field that pays a large income...

Because in all honesty, that is your best bet at paying off that kind of student loan debt. Bankruptcy may be the nuclear weapon of debt, but it still does not raise the income.

[blindsided]

Since you have already renegotiated what you can and you're still living hand to mouth, I would seriously consider a Chapter 7 bankruptcy to wipe out your consumer debt. You sound like an ideal candidate. You could then follow it with a Chapter 13 (following the 2005 limitations) to do something about the taxes and possibly the student loans as well. But in the meantime at least you would not be eating PBJ.

You should definitely start with an NFCC affiliated credit counselor, though, because they can put your consumer debt on a repayment plan with lower interest rates. It is a 100% repayment program, though. See what they tell you about your situation before you go in to see an attorney. Your counseling session can usually be counted toward the one required for filing.

[spell]

As tough as this sounds, close your eyes and think about this.
If you had no debt at all. Would building your net worth to $100,000 be incredibly, overwhelmingly hard?

I thought not. Tough, maybe. A challenge, sure. But insurmountable... hardly.
So, neither is building your net worth from -$100,000 to $0.

In the grand scheme of your life, $100k might even be rounded off of your final grand total.

[Phillymanhere]

Spell,

I strongly disagree. For some us, building $100K net worth is extremely hard especially when we don't have any money to invest because we're swamped with credit card debt.

[ArchStanton]

Would building your net worth to $100,000 be incredibly, overwhelmingly hard?

I appreciate the perspective check and in a certain sense $100k does not seem so daunting. If you had asked me this question no more than 5 years ago, I would have most likely answered as you've taken for granted.

However, while visualizing a way out of the hole is perhaps the very first step in climbing out of it, I never visualized myself here in the first place.

But what I do take from your response is this reminder: things change, and this situation will also change even though it seems overwhelmingly paralyzing.

[ArchStanton]

With $100K in college debt, please tell me that you are a doctor or a lawyer, or some other field that pays a large income...

If only this were the case. No I'm not a doctor or lawyer, and my salary is completely at odds with the cost of my education. No doubt one of the biggest mistakes of my life. Interestingly though, that is not how it started... the payments were manageable at one time. But I'm just as shocked as you may be thinking about it.

[ArchStanton]

Thanks to everyone for the responses. As I mentioned in my original post, it was a huge step for me to just admit that things are out of control, and to do it in a public forum. I also appreciate that many of you, if not most, have been where I am now.

I need to do more research and to find a debt management counselor to talk to. I'm trying to create that 'vision' of the future, of life after bk. Even if all of the credit card debt is wiped out and my taxes are negotiated and put on payment plan (which they already are), there is still the question of paying the college loans and my living expenses at my current income level. And all of this is even more confused by the fact that I could potentially end up with a divorce.

Wow, I guess I really needed to type these thoughts out for myself.

[Flamingo]

Thanks to everyone for the responses. As I mentioned in my original post, it was a huge step for me to just admit that things are out of control, and to do it in a public forum. I also appreciate that many of you, if not most, have been where I am now.

I need to do more research and to find a debt management counselor to talk to. I'm trying to create that 'vision' of the future, of life after bk. Even if all of the credit card debt is wiped out and my taxes are negotiated and put on payment plan (which they already are), there is still the question of paying the college loans and my living expenses at my current income level. And all of this is even more confused by the fact that I could potentially end up with a divorce.

Wow, I guess I really needed to type these thoughts out for myself.

Decisions are always difficult to make when the wolf is at the door. And also marital difficulties at the same time. Sometimes when you put a plan on paper it all makes sense instead of having throughts race through your head. Unfortunately, it's hard to plan it all when there are near future incidents that may take place to make more of a mess. Not only see a debt management counselor, I would highly suggest either speaking with a BK attorney just to find out where you actually stand at the moment and also speak with a financial counselor to get some guidance as to how to handle things for your future years.

[twuoo]

Doing the bk will not get rid of the student loan debt anyway.

And it's not that hard to rack up $100k in student loan debt, and still not be a doctor or lawyer.

I have well over that and I've been going to school and paying back since the early 1990's!