Need some advice

[Salesman]

Hey everyone. I am a recent graduate who is considering filing for bankruptcy for my student loans in a couple of years. The reason I say a couple of years is for a cosigner release clause that I, for personal and moral reasons, must meet. I'll explain my situation and then you can tell me what you guys think.

First and foremost I want to state that in no way, shape, or form am I attempting to place blame on anyone but myself. I lived under a financial rock when I was in college, and the most I had to do with my financial aid was to come home and sign the FAFSA that my mom had already filled out. With neither of my parents ever going to college, I should've foreseen the dilemna this would create. But, I digress.

So after graduation, I sit down and assess the damage. All in all, approximately 140k in student loan debt... for a Bachelor's degree... in psychology. Ok, I can handle it, let me just find a job. So the hunt begins, but every job that I can get with this degree I could've gotten out of high school, and only pays $9-$11/hr. Luckily, I was able to get a job at a used car lot as a salesman. Needless to say if it wasn't for this bit of good fortune I would have defaulted after my first payment. And with this job I can barely maintain any kind of decent lifestyle, and I'm making between 40-50k a year. Without consolidating, my student loan payments at this point would be around $1300 a month. But these institutions have to have some options, right?

Wrong. Dead wrong. My minor student loans, (AES and DirectLoans), offer longer terms, tiered payment plans, interest only payments, etc. Both of these payments total $339. However, Wells Fargo, who I owe approximately 93k to, will not bend whatsoever. To consolidate with them I had to have my aunt cosign, which they do give a two-year cosigner release. These payments equal $600 a month, and have no cap on the interest rate. They also have no repayment plans, and the only forbearance other than in-school is 2 months long!?! What is that going to do for me??

My plan is after my aunt is released from the loan to file for bankruptcy, and file for the separate undue hardship proceeding. On an average month, my net is approximately $2200. I also changed my tax allowances to give me more through the year net rather than a lump sum in hopes I won't default on my loans. My expenses are as follows:

Rent: $350
Electric: $60
Columbia Gas: $78
Internet/Netflix/Xbox Live: $59
Water: $30
Insurance (Car/Renters): $103
Car Payment: $224
Cell: $92
Fuel: $200
Groceries: $200
Wells Fargo: $600
AES: $166
DirectLoans: $173
Credit Card payments: $110

I do not have cable TV service, I use Netfix and my email account from my parents comcast to watch On-Demand. I have to have a phone for work, I text my customers frequently to keep up or gain referrals. There also is another vechicle which I am cosigned on for my girlfriend which is $325, but she makes that payment. The rent for my 1 bedroom house is only $250, but I am responsible for any up-keep to the residence, which includes grass cutting expenses and general maintenance/renovation. So the extra $100 should be more. The only way that I am able to even pay these expenses is for the time being my parents take care of the AES payment, and I always steal leftovers from their house. Also, I did have some money saved from my busy months where I netted closer to 3k, but those months are few and far between. And I've been drained after a few short months. I am also current on all of my student loans payments and am in good financial standing with all of my debt.

As Paul Harvey would say, "..now you know the rrrrrrrreeesst of the story," do you guys think I have a snowballs chance in hell of getting these discharged? At this point I would even take a partial dismissal. I've thought so far as to writing a letter to a celebrity like Oprah who might be willing to help. I tell my friends and family if I hit the lottery, I'll give the rest away, all I want is the 140k to get rid of these loans. I have no problem with working, but I'm in a 1 step forward 10 steps back situation. At the current rate I will have no money put away for retirement, I can't fix my car is something happens, and my degree is doing nothing for me except for hanging on a wall. The company I am working for has virtually no vertical movement being that is a franchised location, and the only way I can improve my situation is to take a paycut and hope another company promotes me, which will put me in default. Feel free to keep the suggestions coming, because at this point I am out of options.

[IamOld]

I sympathize, believe me re student loans...I think discharging PRIVATE student loans MAY - MAY be a different matter...but it may not be...there are people here who are very knowledgeable and they will chime in. If your WF loan is officially an "education" loan it's VERY difficult next to impossible to get it discharged...

HOWEVER - could you consolidate it all through Direct Loan Servicing??

Advice #1 though - PLEASE PLEASE consult with a FEW BK atty's - they will be able to give you the best possible advice.

And by the way - for a moment - FORGET about the money issues - THINK ABOUT WHAT YOU WANT TO DO WORK-WISE FOR THE REST OF YOUR LIFE. You are young - do NOT let this make the decision for you. If need be, go back to school, look at your strengths, etc. Use your college's placement office IF for nothing else that to do a good resume and to figure out what you WANT to do with your life.

PLEASE PLEASE don't let it slip away from you.

[murphsmom]

You definitely should speak with a few attorneys before moving forward with this plan, as our attorney told us that the debts that are NOT discharged are "student loans, income taxes, child support payments".

[helpmeout]

Student loans aren't dischargeable. You may want to look into consolidating them to a lower monthly payment.

And as others have suggested, do consult with an attorney. But don't be surprised if you are told that you can't discharge the student loans.

[daxtell]

i have heard that student loan debt and irs debt are not dischargable in bankruptcy. however i have also done research and noted that each (especially the irs) will let you off the hook for the debt if you can in fact proof a real hardship. and when i say hardship i mean you have to prove that you do not have the ability or can never make enough money in your lifetime to repay it. something like you have a disability or something that would hinder you from ever being employed full time or at all.

[despritfreya]

Just being out of school (even waiting 2 years is just being out of school) you will be hard pressed to show a hardship. Most Judges won't even look at your case unless you can show that you could not comfortably fit into one of the many "income sensitive" repayment plans offered by both private (yes they will work with you if you find the right contact person - no different than folks attempting to modify their mortgages) and government lenders - you need to find the programs that are offered and those programs do change from year-to-year.

In addition, while you do live pretty frugally and one has no clue what your income or your expenses will be in the future, based upon the info provided I can tell you that a Court may find that you have the ability to pay $863.00 per month towards the loans as opposed to the $939.00 you have referenced above.

The Court may disallow the "recreation" you listed at $59/month and, if you file bk, the $110/month you allocated for credit cards will go away. Therefore WITHOUT the student loan payments, your expenses (based upon the above numbers) will total only $1,337.00 per month and, with income of $2,200.00 per month, net, you can afford to pay $863.00 towards the loans (Wells Fargo, AES & Direct Loans).


Getting a Judge to agree to a hardship discharge is very, very difficult. You would be suing all three lenders and, while you can file one suit naming all three, you will have to treat them separately for the purpose of settling. The reality is that you are more likely to end up settling then getting a Judge to rule on the merits of your case. Before you can attempt a settlement you must show each that you have exhausted every available program offered by those lenders. I just settled a hardship suit with the USDE for $30k to be paid over 20 years. But, if my client fails to perform the debt goes back to the $90k that is owed. I can tell you that the facts of that case were sad. . . not just someone relatively recently out of school, unable to find a job earning a decent wage.

Des.