Can't file bankruptcy and Can't make the payments they want..Any suggestions, please?

[Txgirl]

Between myself and my husband we have over $100K in Private Student Loans. After doing some research unless there is some major undue hardship they can not be discharged.

I am at a loss of what to do? The collection agency that is calling is horrible! They called Monday and wanted me to send them about 80% of what I make in a month. Then they wanted me NOT to pay my other bills and pay them. Then they started telling me that these were Private Student Loans and they could do what the want, however they wanted.

I have been making a payment; however substantially less than what the amount. I am trying to show good faith.

I have made the decision to snowball our credit card debt and that should be paid off in about 5 years. However by the time that happens, the amount due for the private SL will double I am sure, with captalized interest, late fees, etc.

My husband and I both work full time jobs. I feel very lucky to have a job in this economy. We make enough to pay the mortage, truck payment, monthly bills, credit card bills, groceries and household needs. We really don't have any extra money after all of that is paid.

I have been reading what can and can't be done in Texas and what Private student loans can and can't do. I know eventually we will get served and have to go to court.

What do I do? The loan is still with the original creditor.

[AngelinaCatHub]

My opinion only: Bk the other debt. The automatic stay will stop the penalties and interest. Ask your lawyer to at least try to declare you are destitute on these debts. Have the lawyer work out an easier payment to these student loans. “Half of something, is better than all of nothing”. This can be worked out. ‘Hub

[Txgirl]

Thanks for the info!

Our other debt is managable though. Wouldn't that just be digging the hole deeper.

I really look at it as a loose, loose situation.

It's just the added stress right now is horrible. (I am pregnant)

[gingerbug]

Either chapter 7 everything and dedicate all that you can to private student loans or do a chapter 13 to keep them at bay for 3-5 years. Sometimes you can continue to make payments to student loans outside of what they get in your chapter 13 plan to get them paid off faster.

[Txgirl]

But with over $100K and like $60K income, Our net is like $4000, they want like a 1/4 of that for the private student loans.

My credit cards payments are like $400 a month and if I do the snowball debt, I can have those paid off in a few years.

[dingdong]

What kind of school dd you attend and what kind of loans do you have exactly?

There is a progam where you can consolidate student loans and go on an income contingent plan, however there are some criteria loan wise which you must qualify for.


The program is called the William Ford Direct loan program.


Here is some info and the link.



1. What are the benefits of a Direct Consolidation Loan?

Direct Consolidation Loans allow borrowers to combine one or more of their Federal education loans into a new loan that offers several advantages.

One Lender and One Monthly Payment
With only one lender and one monthly bill, it is easier than ever for borrowers to manage their debt. Borrowers have only one lender, the U.S. Department of Education, for all loans included in a Direct Consolidation Loan.

Flexible Repayment Options
Borrowers can choose from four different plans to repay their Direct Consolidation Loan, including an Income Contingent Repayment Plan. These plans are designed to be flexible to meet the different and changing needs of borrowers. With a Direct Consolidation Loan, borrowers can switch repayment plans at anytime.

No Minimum or Maximum Loan Amounts or Fees
There is no minimum amount required to qualify for a Direct Consolidation Loan! In addition, consolidation is free.

Varied Deferment Options
Borrowers with Direct Consolidation Loans may qualify for renewed deferment benefits. If borrowers have exhausted the deferment options on their current Federal education loans, a Direct Consolidation Loan may renew many of those deferment options. In addition, borrowers may be eligible for additional deferment options if they have an outstanding balance on a FFEL Program loan made before July 1, 1993, when they obtain their first Direct Loan.

Reduced Monthly Payments
A Direct Consolidation Loan may ease the strain on a borrower's budget by lowering the borrower's overall monthly payment. The minimum monthly payment on a Direct Consolidation Loan may be lower than the combined payments charged on a borrower's Federal education loans.

Retention of Subsidy Benefits
There are two (2) possible portions to a Direct Consolidation Loan: Subsidized and Unsubsidized. Borrowers retain their subsidy benefits on loans that are consolidated into the subsidized portion of a Direct Consolidation Loan.



2. What are the differences between FFEL Consolidation vs. Direct Consolidation?

Borrowers are encouraged to check with their existing loan holders or servicers to find out about consolidation options available to them. Some differences between programs may include:


Minimum balances or numbers of loans required to apply.
Types of loans that can be consolidated.
A prior account relationship may be required.
Repayment incentive benefits to encourage good repayment behavior.
The convenience of electronic debit, ensuring that monthly payments are made on time.
Repayment plans offered, such as payments sensitive to a borrower's income, family size, and total education indebtedness.



3. Who is eligible for a Direct Consolidation Loan?

To qualify for Direct Consolidation Loans, borrowers must have at least one Direct Loan or Federal Family Education Loan (FFEL) that is in grace, repayment, deferment, or default status. Loans that are in an in-school status cannot be included in a Direct Consolidation Loan.

Borrowers can consolidate most defaulted education loans, if they make satisfactory repayment arrangements with their current loan holder(s) or agree to repay their new Direct Consolidation Loan under the Income Contingent Repayment Plan.

Borrowers who do not have Direct Loans may be eligible for a Direct Consolidation Loan if they include at least one FFEL Loan and have been unable to obtain a Federal Consolidation Loan with a FFEL consolidation lender or have been unable to obtain a Federal Consolidation Loan with income-sensitive repayment terms acceptable to them or intend to apply for loan forgiveness under the Public Service Loan Forgiveness Program..

Borrowers who have only a Direct Consolidation Loan cannot consolidate again unless they include an additional loan.

NOTE: The Direct Loan Servicing Center has information on the Public Service Loan Forgiveness Program.



4. Can I obtain a Direct Consolidation Loan if I don't have any Direct Loans?

Yes, borrowers without any Direct Loans may be eligible for a Direct Consolidation Loan if they include at least one FFEL Loan and have been unable to obtain a Federal Consolidation Loan with a FFEL consolidation lender or have been unable to obtain a Federal Consolidation Loan with income-sensitive repayment terms acceptable to them or intend to apply for loan forgiveness under the Public Service Loan Forgiveness Program.

http://loanconsolidation.ed.gov/index.html

[Txgirl]

Thanks for the info! That is for federal student loans. I do have those consolidated with them!

The ones I am talking about our private and much more difficult! LOL! Less options!

[treehugger1]

I just found out about the direct student loan consolidation program. It seems that I can now "reconsolidate" my current consolidated loans. It's a good program and stays with the DoE (Department of Education.) The income contigent part could be important if your loans are "put-out-to-pasture" for 5 years of a BK 13. I would guess the interest will still accumulate. I have $70+K in studnet loans and they are not in default, but I have considered defaulting just to encourage a 15% wage garnishment. For a variety of reasons, I continue to NOT file a BK 13.

On the other hand, once you officially default on student loans (270 days or so is my recollection) the DoE can move to wage garnishment at 15% without going through legal channels. I would think this is put on hold if one files a BK 13 or one cannot convince a trustee to consider them outside of the 13 plan.

Student loan debt will not go away. For some in financial trouble who are not prepared to file BK, it is almost reasonable to let the loans go to default and get the 15% wage garnishment. This only leaves an additional 10% of garnishment left for other creditors/CA's. As the old knight in the Indiana Jones movie stated, choose your cup wisely (or something like that.)

Such a decision to file for BK with student loans should probably depend upon what your future goals are; effect on your credit rating, possible financial obligations to ailing family members, etc. I say this because for someone of my age (over 50) and the issue of dealing with aging parents is important before I let a BK 13 trustee tie my finances up for 5 years. My credit standing is not all that important to me as I have learned to live with my income and can survive wage garnishment. Since I would still be on a 100% unsecured payback plan should I file BK 13, I would have nothing left to deal with student loans or elderly parent issues. I prefer to take my chances with the traditional court system when it comes to debt related civil matters. Just my own thoughts.

There are far more folks in the US that are technically bankrupt than those who file bankruptcy through official methods. You seem to be well-educated, so you might want to google "informal bankruptcy" and see what the research suggests.

Do your own due diligence.

[dingdong]

You might still qualify for a Ford Loan if you included the Federal loans with the private loans.


I think one of the issues for qualification are a lender not offering an income contingent plan and rolling in a Federal loan.


Seems like you qualify with those two criteria if you consolidate your Federal loans with the private loans.

You should call William Ford and ask. They are much more consumer friendly that private lenders, easy to get a forebearance or deferment and the IC plan is great!

Plus, you only have to be in repayment for 25 years, which I know sounds like a looooong time, but if you are low income and only paying a couple hundred a month, for 25 years, it works out. You do have to pay taxes on the forgiven debt at the end of the 25 years, but if you consider a tax bracket of 25%. If you at least cover interest during that time, you will only be paying whatever your tax bracket is times your principle. So hypothetically 25% of 60,0000. Unless you happen to start making a lot of moolah in the future.

You should call them and at least see if you can consolidate those loans.

I may be wrong, but I think you would qualify.

[dingdong]

I did some reading. It looks like you can't consolidate private loans with WFDL.

But if you have a consolidation loan now, are the payments stretched out over 30 years?

With the WFDL, you can do that, so if you consolidated your consolidation loan with WF, if the lender you are currently with does not have an IC plan, you can get a Ford loan, then go on the IC plan, which might help free up some cash to make the private loan payment.

You can always pay more on the Ford loans if you are worried about your balance growing, but it may help you keep the minimum payment down enough so you could make it.


DOes your current consolidator ( of your Federal loans)offer an income contingent plan?

IF they don't, you qualify for a FORd loan, that I am sure of.

[Txgirl]

Yes, I consolidated with Direct Loans. I also work in a field (with the elderly and disabled) so basically I can do the income contingency repayment for 10 years and the remainder is discharged. Something like that. However my federal loans are in an economic hardship deferment.

The loans I am having troubles with is Private STudent loans. They have very little repayment options.

[dingdong]

If your credit is decent, you might try googling private loan consolidation and see if there is a consolidation lender out there that can extend the repayment terms. If you are on a 10 yr repayment schedule, you could try for 20 or 30, of course you would be paying a hell of a lot more interest, but if it keeps you afloat, it might be worth a try.

[sassiebaz]

I too have a private loan. It was the dumbest thing I ever did, taking out that loan. Do you realize by the time I pay this $15K off, it will be more like $65K...sickening!

[Txgirl]

You guys are great over here! I frequent another credit/debt forum and they are not as nice.

sassie--I totally agree. The worst thing ever!