What would you do?

[sigse]

I'm considering filing for bankruptcy.
I know student loans can not be forgiven through bankruptcy but they are considered when determining whether other debts are to be forgiven.
Here is my situation:
I owe 166,000.00 in student loans which comes out to 906.00 per month.
This debt is through 2 different lenders with one payment of 656/mo and the other payment of 240/mo. The interest rate for the former is 3.5 %. and that of the latter is 4.8. The principal amounts owed are 146000 and 20000 respectively.
Consumer debt is about 16000 through 5 different credit cards and an average interest rate of 23%.
My NET income is 31,000. I am behind on all my credit cards by 5 months.
I live in georgia where consumer protection laws are pretty puny.
My rent is 670.00/mo. I have the option of entering into a forebearance period which delays repayment of my student loans for 30 months. After paying my student loan payments for the month, there simply isn't enough to pay these credit card companies.
I'm wondering if I should use this forebearance to pay off my cc debt at an aggressive rate or just file for bankruptsy. My credit rating is ridiculously low and thus a lowered score as a result of filing bankruptcy isn't a consideration.
I'm wondering what will be to my benifit in the long run.

[CATCHMEIFYOUCAN]

im not a lawyer, but you debt cc debt seems to be awfully low to consider filing bk .. i would look into a ccs program to get a hold of you cc's .. i heard student loans are separate from bk, you'll stay have to pay on them, seek a couple lawyers their first consultations are free ! keep your options open about bk !

good luck, catchmeifyoucan

others will chime in that may have similiar situation like yours with student debts and bk

[sigse]

im not a lawyer, but you debt cc debt seems to be awfully low to consider filing bk .. i would look into a ccs program to get a hold of you cc's .. i heard student loans are separate from bk, you'll stay have to pay on them, seek a couple lawyers their first consultations are free ! keep your options open about bk !

good luck, catchmeifyoucan

others will chime in that may have similiar situation like yours with student debts and bk

You cant get blood from a turnip. How can the mandatory student loan payments NOT be considered in bankruptcy proceedings? The student loans ARE going to be repaid and any and all credit card debt takes a back seat to student loan repayment. If there isn't enough left over, after student loan payments,then what. I mean realy...then what?

[sigse]

I'm assuming you aren't suggesting that I want sl forgiveness since I already addressed that in the first part of my first post.
With the student loan burden I have, I'm not going to be living any normal standard of life for the next 25 years (no home or private property of any kind) . Given that, what the heck is a bankruptcy filing going to do to me?

[Grace]

You've got great interest rates for your student loans. I've never seen rates that low for student loans. When did you lock those in?

[CindyLou]

I locked in to a student loan consolidation for my 60,000 in student loans at 3.85% in 2003. The lowest year ever!!

Sigse, have you considered consolidation of the two loans and doing the graduated payment? You payments seem a little high. How many years are you paying them for? If you are going to file BK and need to catch up then put them in forebearance. I have utilized forebearance a few times. its very very easy.

[lrprn]

You cant get blood from a turnip. How can the mandatory student loan payments NOT be considered in bankruptcy proceedings? The student loans ARE going to be repaid and any and all credit card debt takes a back seat to student loan repayment. If there isn't enough left over, after student loan payments,then what. I mean realy...then what?

Just so there's no confusion, student loans ARE included on the Means Test as non-secured, special situation loans when filing bankruptcy.

Some of the federal student loan lenders (American Educational Services, etc) often recommend that you put your student loans in forbearance during bankruptcy. Just depends on the lender. Even if you don't pay on your student loans for a period of time, the interest still accrues. Just wanted you to be aware of that.

Here's an excellent resource for understanding what options you have when you can't pay your student loans - http://www.nolo.com/article.cfm/pg/1...3/208/135/ART/

Hope this helps. Please post questions you have any time - that's why we're here!

[GoingDown]

You might consider a "Direct Consolidation Loan" with what they call "Income Contingent Repayment" which comes directly from the U.S. Department of Education. They base your monthly payments on what you can afford with your income, even if the resulting monthly payment is too low to even pay the monthly interest charges. If your income drops, so does your monthly payment. In some cases, your monthly payment will even drop to zero while you are unemployed without hurting your credit score at all. Then when you find a new job, your payments start back up at a level you can afford. After 25 years in this program, any remaining unpaid loan balance is forgiven by the government. To find out more about it, go directly to the U.S. Department of Education's website.

It's a good program and I highly recommend it.

[CindyLou]

Yep, mine is a Direct consolidation loan

[wrinkleigh]

I wouldn't do anything to jeopardize the rates that you have locked in. They are not going to be that low again any time soon, and with your principal amount outstanding, even a little % increase would hurt.

With your education, would it be possible that you could get a better paying job with your degree? Good luck in whatever you decide -- just keep in mind if you file NOW, and something significant happens in the future -- you will be in even more trouble, because bankruptcy protection wont be available.

Also, depending on what your occupation is, direct loans have some cancellation programs available. Maybe you qualify to have your principal reduced. Check out their website at ;http://www.dlssonline.com/qctr/help-...=MiniGlosEntC1

Here are two examples that I found:

Quote:

Loan Forgiveness -- Child Care Providers
If you receive a degree in the field of early childhood education, become a childcare provider in a facility that serves a low-income community, and meet other eligibility requirements, you may be eligible to have up to 100 percent of your combined Direct Loan/FFEL debt canceled. However, this type of loan forgiveness depends upon the availability of federal funds. If no funds are available, you will not be able to receive this type of forgiveness.

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Loan Forgiveness -- Teachers
The Teacher Loan Forgiveness Program was instituted by the U.S. Department of Education to encourage individuals to enter and remain in the teaching profession. The Program grants loan forgiveness of up to $17,500 for teachers in certain specialties and up to $5,000 for other teachers, who teach for five years in certain low-income schools and meet other requirements. This forgiveness benefit is available to Direct Loan and Federal Family Education Loan (FFEL) program borrowers who did not have an outstanding balance on a Direct Loan or FFEL Program loan on October 1, 1998, or on the date they obtained a Direct Loan or FFEL program loan after October 1, 1998.