Really stupid mistake

[naivemistake]

Hi Everyone,

I'm a 20 something young professional that fears she may have just ruined her life. A month ago, I was in the running for a very high paying job overseas ($100k a year). It took me over a year of networking to get in the running for a job like it. A family friend who worked overseas for years said it would be in my best interest to consolidate all of my student loans with a personal loan, and take out just a touch more to offset the visa/entry clearance fees and help myself get settled.

I listened to him.

Yesterday, I got a phone call from the firm I was hoping to work for and they said due to the global economy they were not hiring anyone for the position. I almost died. I have a job now, but it pays a fraction of that one and I have NO way of paying the loan off. I live home with my parent, I drive an older car, no cell phone, and I make about $900 less than is required to pay the loan. My question is, even though I used the loan to consolidate my student loans, can I get it discharged in a Chapter 7 Bankruptcy?

[keepinitreal]

Get some free consults with bankruptcy attorneys in your area. They can give you guidance on what you should do next. They've seen it all. Good luck!

[keepmine]

Could be a problem if your lender is on the ball. As the prior poster suggested, see a lawyer and let them look at the documents you signed.

http://doney.net/bkcode/11usc0523.htm

(b) Notwithstanding subsection (a) of this section, a debt that was excepted from discharge under subsection (a)(1), (a)(3), or (a)(8) of this section, under section 17a(1), 17a(3), or 17a(5) of the Bankruptcy Act, under section 439A of the Higher Education Act of 1965, or under section 733(g) of the Public Health Service Act in a prior case concerning the debtor under this title, or under the Bankruptcy Act, is dischargeable in a case under this title unless, by the terms of subsection (a) of this section, such debt is not dischargeable in the case under this title.

[naivemistake]

Update

I just spoke with an attorney. He was inclined to say 'Yes' it could be discharged because when I filled out the forms for the loans, I was not asked to give a breakdown of how much of each type of debt I was consolidating. Some of the loans were personal loans- not private student loans- I used them to cover expenses that student loans do not cover. Plus, I'm using the remainder to offset transportation expenses to find a better job (I don't live near a major metro area).

I have a bunch of interviews coming up in the next two weeks so ::hopefully:: I won't have to file.

[biotechsolution]

If the student load debt was a substantial amount that was transfered to the personal loan or paid by the personal loan I would bet on an AP being filed.

[BCA2009]

You obviosly need to consult with someone expirenced in this area. But It sounds like you did some good planning (althought it was an accident). If you took out a regular personal loan that was not a "consolidated student Loan". I wouldn't think they would have any recourse. If on the loan papers it didn't mention anything about what the funds were to be used for. I don't believe thaey can go back and say it is student loan debt.

But please talk with someone well versed in this area.

I've definitely heard of people taking advances on creditcards or using home equity loans to pay student loan debt. They were no longer considered student loans.

What was the collateral for the loan? was it just a credit card? Most young people can't get large personal unsecured loans.

[naivemistake]

There is no collateral for the loan...it's unsecured. I have more interviews in the coming weeks, so if everything works out I won't have to file. I'm just scared to death.

[NoMoeMoney]

I would guess that if you could consolidate your student loans on a credit card or personnel loan and then declare BK that EVERYONE would be doing it. I'd talk to an attorney before going down that path.

[JackBondLove]

The consolidation of the student loan into the personal loan would only made sense if it were at the same or lower interest rate. The worst that could happen is that the debt would be not be discharged. Unfortunately in all likelihood, the trustee or at least the creditor would see to it that the debt would be not discharged. I am not sure how non-discharged debt would be handled with respect to the interest rate going forward.

There was no problem in taking out a little bit more for an expected job that did not go through. You still have that money (or have used it to pay for debt and living expenses), right? Anything left from that would be an asset that would be confiscated to pay back that debt.

The best thing to do is to just be honest, and let the chips fall where they may. Had you kept the student loans, they would not be discharged in BK anyway. You sound like you don't have any assets, so the only thing that can happen is that your creditors get a garnishment.

I would say that you could use this opportunity to try and get some relief from your creditor(s), by getting the interest rate lowered, fees waived, etc., with the implied threat that if you can't get this, you will have no choice but to do Chapter 7. The creditor(s) will want to extract as much repayment as possible, and Chapter 7 is not a good way to extract such cash. You can say that you expected to get the high paying jobs, and blew through the cash because of it, but it fell through. In fact, if you can hold off for a year or so by making partial payments, you might be in a position to declare Chapter 7 in the future, and have the debt discharged. Or maybe you will get the high paying job, and pay it off.

[BCA2009]

I would guess that if you could consolidate your student loans on a credit card or personnel loan and then declare BK that EVERYONE would be doing it. I'd talk to an attorney before going down that path.

I've taken alot of cash advances over the years. Several for 5K or more. The money went into my checking account and I then did with it as I pleased. The CC never asked what I was doing with the money. I agree it would be unusual for a bank to give you 30K in advances wihtout any security for the loan, that's why I asked the regarding what the loan the OP was asking about. I also paid down one of my wife's student loans with a home equity loan many years ago. The status of student loan did not transfer to the new loan.

Everybody doesn't do it, becuase by the time they realize it would have been a good idea, they are already contemplating BK and they can's get a cash advance anymore or they can't wait out the time for advances to drop off of the lookback.