Am I a candidate? Strange situation (Help!)

[stargazer]

I'm sure these are common here, but hear me out. This is a weird situation.

I have 65K in credit cards, and owe about 100K in private student loans as well as 20K in federal loans. 2K in IRS debt too.

I am in school still because I have some time left on my degree and because we simply can't afford to start paying those things back!

We are paying only credit cards right now, and we can't hardly do that. The job market for my partner is not stable. I am unemployed, getting only disability benefits from the government. Because of my disability, I don't know how well working is going to pan out for me at this time, it is a tough call.

So here is the issue, condensed; we are paying a CCCS type company to handle our credit card payments. They are supposed to be paid off in 4 years (we have been with them since February '08). It continually stretches us so far, we simply cannot save any money. We recently had a medical emergency and a dental emergency back to back! The hospital bill is sitting there and we had to pre-pay the dentist $800. We had to use tax money to do that, and we already owe the IRS. All because the credit card payments kill our budget too bad to save for anything. My state has high car registration fees and at this point, I don't think we will even be able to afford registering the car. I have health conditions and cannot afford to get them taken care of. I am walking around in old glasses that I can't see well out of because I can't afford $250 for a new pair. My health is in very bad shape (we are uninsured) and my partner really needs some preventative care or in a few years, he won't be much better off. But no matter how good we are with the finances, we find ourselves negative every month.

Now, this is all WITHOUT the student loans being due. Already, the credit card payments take 35% of our income. Altogether, I guarantee you it would be 90% of our income to pay everyone.

But bankruptcy almost doesn't seem like the answer either, because I can't discharge the student loans in it. And from my own calculations, even if the credit card debt wasn't there, we'd be in even WORSE trouble trying to repay the student loans because they will easily be $500 a month MORE than the CC payments. If we can't afford the CC payments now, we can't afford the student loan payments... ever! Even by themselves.

But in about 1.5 years (perhaps sooner if things go really wrong) All will be due all at the same time, rendering us homeless and broke if we try to pay it all.

The original plan was to stay in school to defer payments until the credit card debt is paid off. I don't think we can afford to keep me in school that long and the student loans will have grown a great deal in 4 years because of accruing interest.

I hope I'm making sense out of this. It is a mess, I know.

I don't know if BK can help us. I don't know that ANYTHING can help us.

My partner is out of work again... third lay off. We cannot afford to pay credit cards for october unless we use MORE tax money (he is contract worker and gets a lump paycheck -- tax withholding is all up to him). And to me it feels RIDICULOUS to be taking money from the government to pay credit card bills!

All we can do is call the credit counseling people and see if they will have the credit card companies suspend 1/2 the payments again like they did before when we were in this situation, but we can't afford even 1/2. It would cause the rent to bounce and that's far more important to keep the place we live in. It is tempting to quit paying the cards, SAVE all that money that would normally go to them and hunker down with it (in 6 months, it will be 5 figures in savings!) in a very SAFE place and let the chips fall where they may in regards to garnishments, etc. A garnishment of 25% we could afford. We are very prepared to live on a cash-only system. We have NO assets. Nothing! I am judgment proof because of the disability and that particular account is separate from everything else. The CC debt is all in his name. I was only an authorized user.

Student loans are not due this second, but we are joint on all of them except the federal ones.

We are truly scared this house of cards is going to collapse on us and basically kill us. We have cut back and downgraded our lifestyles but everytime we do, we don't get anywhere! We cut way back on electricity and heat and think our bill will be so much lower. No such luck! There's always another energy rate hike and we are paying the same, or even a little more for using far less. Same with gas, food, EVERYTHING! We can't afford it anymore and it's hurting things far worse than our credit rating, such as our HEALTH. I have panic disorder too, and can't afford a therapist but I can afford some medication. It's very rough on me with that and my anxiety has been so bad this week (Monday he got laid off) I have missed two school assignments. I can't sleep, eat, I don't have the motivation to do anything. It all seems pointless. The anxiety over the bills is hurting the relationship more than the debt itself.

I just can't take anymore -- and if it were CC's alone, I'd be in a BK court in a heartbeat. But it is not that simple. And I feel the pressure of the looming bills and it's suffocating.

I just want to cry because I feel so out of control and helpless. The situation feels very hopeless.

Is there anyone out there that can help?

[JRScott]

Okay financially your in a mess.

May I ask the nature of your disability?

Then my advice is to stop paying on the DMP. They are generally horrible anyway and most people like yourself find themselves unable to really get out of debt. I'd pull a credit report, my guess is that if its like most DMPs the CCs are still reporting you as paying late and being in default.

So stop paying them, CC debt is generally dischargeable, taxes are not.

Next what is the nature of your student loans? You mention private, are these from those wacky online universities that overcharge you for unaccredited degrees, I hope not. If they are multiple loans you need to consolidate them into one loan, this will generally give you a lower payment, you'll need to read the terms of the loans though and see how you can consolidate to the best of your ability.

When paying for things. Do so in the following order:

Food
Mortgage
Utilities
Car
Gas
Insurance (I assume the car is insured)
Taxes
Other

Given your situation it probably would not hurt to seek 3-4 local bankruptcy attorneys for a free initial consultation and check on your options.

You are not alone though, there are many college people who are being taken in by the use student loans to go through school then find they can't afford them. Student loans in the 100s of thousands of dollars basically require a six digit income to repay which most graduates are not going to find. Though in theory student loans can be discharged the burden is so hight that I have never seen anyone make it.

The taxes if not more than 3 years old are not dischargeable though in any circumstance.

[stargazer]

JRScott, thanks for your reply.

May I ask the nature of your disability?

I have Bipolar I disorder, diagnosed 10 years ago. It is not likely to be considered grounds for dismissing the student loans if that what you're trying to figure out. For some reason, they don't consider it to be a "real" disability nor do they consider it to be permanent even though 99% of the psychiatrists in the world would disagree on both accounts.

Next what is the nature of your student loans? You mention private, are these from those wacky online universities that overcharge you for unaccredited degrees, I hope not.

The 100K is from private banks, like Chase bank and Bank of America. On their website, they have applications for private loans for students. That is how I got them.

I do have 20K in federal Stafford loans, which by themselves would be afford to pay back and their terms are kinder.

You are not alone though, there are many college people who are being taken in by the use student loans to go through school then find they can't afford them.

It's been common the last few years. Lenders are not so loan happy now (perhaps with those they still are, because consumers have ZERO protection from them and it's a life long free for all for lenders) but based on some pockets on the internet for support, I can tell I'm not. But I feel like I am though. I feel like I'm the only person in this country that has done the stupidest thing... run up the private student loan debt that I have no way of getting out of. I did not know that it would ever be an issue. I did not know about predatory lending. I though they were bound by the same rules as the fed loans! No where in the convoluted contract did they mention their powers were basically above everything else. I thought it was a basic consumer loan, bound by federal rules (it's a STUDENT loan afterall) and about as "serious" as credit card debt. Now I'm in for a life-crushing APR when I get out of school. No one I know knows about my money issues, so I guess others are the same and simply don't reveal their 6 figure woes to the world.

The taxes if not more than 3 years old are not dischargeable though in any circumstance.

We started repayment on the taxes in 2007, for the taxes owed in 2006. If things keep going like this, we will have another $1500-$2000 to tack on top come April. Because sadly, the tax money is all we have for emergencies as I mentioned already.

I don't even mind paying those back, either. I just resent the credit cards and private student loans. The interest rates are the worst part. We have paid what we actually owe, but because of compound interest, we get to pay it many times over.

[JRScott]

You might carefully review the student loans, if they are signature loans and not actual education loans then they are dischargeable I believe.

I'd still take your situation before several lawyers. Though I've never known of anyone to successfully challenge student loans there is always the first. A lawyer would know better.

I'm assuming once those kick in you are looking at around 3600 min payment a month on just the student loans. It might be possible to get some of them put into forbearance but usually the loan only allows so many years of that but it might help you.

Hopefully some more folks will come pipe in

[fltoo]

I would stop paying the cc's immediately and bankrupt them in a chapter 7 while you have no income.

Deal with the student loans next. One step of relief at a time will help.

[AngelinaCatHub]

I would stop paying the cc's immediately and bankrupt them in a chapter 7 while you have no income.

Deal with the student loans next. One step of relief at a time will help.

I agree. Sounds like a quintessential Chapter 7 to me. These people need relief or the "disability" as well as mental strain will become worse. A bk is at least a bit of light at the end of that tunnel of debt. 'Hub

[Flamingo]

Please get some free consultations at a few BK lawyers in your area. Take with you to the appointments a complete listing of all your debts, monthly payments, sources of income for your household, listing of assets and your most recent tax returns. Unless you are in severe hardship or severely disabled (having bipolar disorder is not a severe disability, is treatable and you are employable) you will not be able to discharge the student loans - that may include the ones with Chase, etc. depending on what is in the paperwork/contract that you signed when you took on those loans - take that paperwork with you to your appointments.

The above is reality and what you will have to face. Most people that sign on with DMP's eventually end up filing bankruptcy which they should have investigated in the first place. Best of luck to you and I hope you get things to work out to your advantage.