Interesting discussion with Legal Counsel

[treehugger1]

I was speaking with an attorney the other day regarding my situation. They immediately start the BK 13 spiel. I don't blame them as they charge $3500 - $3800 here (going rate for 13) and I am asset proof and would be close to a 100% payment plan. I'm a slam-dunk case. Just fill out the forms and get them to the trustee. I explained the concern of rolling over $70 in student loans at 8.25% interest and what that would cost during the 5 years of the plan. They said, "Oh, I see your point."

The attorney suggested I call DE (department of education) and speak with them about moving up the timeframe should I default in order to get into the "administrative wage garnishment" of 15%. Generally, this doesn't happen on guaranteed SL's until 270+ days from last payment. The nice thing about this is that I gain years (maybe many years,) leaving only 10% available to other creditors. With about three of my collection accounts above $10K, he said they could eventually sue, get judgment, see what they get of wages at 10%, and would probably back off. Especially if they look at my credit report and determine they could be in line for garnishments a long, long, time.

I think I will actually call my loan servicer and talk about this. I'm current on student loans, but what the heck, why not have them take 15%, which is close to my current payment plan. I'll see what they have to say and report back.

[floridian]

that sounds like something that might work...i know its hard to think outside the box on a bk forum, but the more i think of a chap 13, the more it rymes with indentured servant...

im hoping a miracle will get me into a 7......or maybe my CC company will call and tell me to just forget the whole thing!

[treehugger1]

BB, currently my SL payments are about 16% of takehome. The depratment of education does not add fees, but does send a direct garnishment writ to my employer (no courts needed.) Since i have no idea about when or if I will file a BK 13, it seems to make sense to make sure the nasty SL's are paid. As mentioned, if I currently choose the BK 13 now, the SL's go into interest bearing deferrment at 8.25% which builds approximately $30+K in interest at the end of five years. Currently, I keep only enough exemptions on my W-4 to break even on taxes, or somtimes I have to pay some money. I wouldn't care about the SL's taking any tax return money as it only chips away at teh principle, not a bad thing. What the h*ll do I have to lose? In the meantime, my SL'd are paid and only 10% garnishment is left for other creditors. Hey, I didn't write the RULES for my state. But, I can play by them.

Student loans are a huge wild card. I'm reading about ideas that suggest to holders of SL's who have little or no credit that they take all the cash advances and/or balance transfers they can and first consider using this to clear their student loans. They can then wait 6-12 months and consider BK. I don't know the details of this, and I certainly cannot do this given all my CC's have charged off. This is probably a reasonable idea for folks who have "private student loans." I donlt have these, but part of this method makes sense.

Student loans are quite nasty and they never go away. Upon your death, they may have some interest in your estate, but if your estate only involves a retirement/pension account, they can't touch the beneficiary.

As you can probably tell, I'm looking to buy as much time as needed, without increasing the SL debt burden, which is not dischargeable in BK, 7 or 13.