Worried about student loans... (Long)

[ichb]

Hi everyone,

I love this forum so far and I just found it yesterday. My husband and I are both students, he's graduating in May and I have 2.5 years to go. I'm 37 and he just turned 40. We have a
Mobile home mortgage $30k
Student Loans $99k
Auto loans (2) $22k
cc debt $30k
prescription costs of $1k monthly
Oh and regular income less than $52k for both

We have almost decided to go ahead and get the bk process started. But I am worried about continuing my education, I have little employability without a degree because I have some medical/depression issues. I'm getting my BA in Software Engineering. (I hope)

Possible caveats:
getting future student loans - which is why I'm posting in this thread.
possibility of a small 20k inheritance (don't know when).
qualifying for a ch 7 - very little disposable income.
and keeping my laptop which I purchased in Feb (fully intending to pay off) but need it very much for school, I used a student loan refund for the laptop, and since I ordered it online I paid off a card and then bought it.

I had no idea our money situation had gotten so out of hand, there always seemed to be just enough to get by, then in Jan my husband's company changed his medical insurance so we have to meet this huge (to us) deductible before they will pay for anything at all including prescriptions.

Apparently our income has been much less than our outgo for a while but with student loan refunds and tax refunds we didn't notice right away. Our credit is good, but won't be for long. We've sworn off credit cards for good!

Contacted an approved consumer credit counseling and we don't even qualify for a debt management plan.

I have been sick to my stomach and crying every day since we found out we were in this mess and finding this forum has helped a great deal. Thanks just for being there.

Talking to the second lawyer tomorrow. Any advice or words of encouragement would be greatly appreciated.

[lrprn]

Hi ichb and welcome to BK Forum! (By the way, I moved your post here from the end of a longer thread to its own thread so you'll get more and better responses.)

Mobile home mortgage $30k
Student Loans $99k
Auto loans (2) $22k
cc debt $30k
prescription costs of $1k monthly
Oh and regular income less than $52k for both

Here's your biggest problem - that $99K of student loans. They cannot, repeat cannot, be discharged in bankruptcy. They are already twice what you both earn together (or equal to what you both earn in a year - I couldn't tell for sure the way it's worded).

Even if your student loans are at the lowest interest rate of 5%, to pay them off in 10 years will require a monthly payment of $1050.00. If you paid the loans off in an extended plan of 15 years, that's still $785/month. If your interest rates are higher (likely) then the payments are going to be even higher. (See http://www.finaid.org/calculators/sc...anpayments.cgi for a good student loan payoff calculator.)

If you file bankruptcy, that frees up not making payments on $30,000 of credit card debt but the rest of your costs and expenses look like they will stay as-is.

Does not making cc payments free up enough for you and your husband to make all the other payments, including your student loan payments, on time every month for everything you want to keep? If the answer is no, then you both have some hard soul-searching to do. You either have to make more money, reduce expenses, or give up more assets. There's just no other way.

Hang in there and keep posting questions as you think of them. We'll help you sort things out if we can. Also start making appointments for free or low-cost iniitial consultations with 3-4 experienced bankruptcy lawyers in your area. That way you'll find out whether filing bankruptcy is going to help in your situation or not.

[ichb]

Paying off the student loans...

Thank you for replying so quickly.

I was aware that student loans and secured loans do not get discharged in bankruptcy.

I forgot to mention that not all of the student loans are in repayment yet and many are subsidized so the gov. pays the interest. I have the 3 that are in payment in forbearance right now. The rest are still deferred because I am an active student. I won't be racking up all that much more in student loans because I have a small scholarship and get a decent grant and I will NOT be taking any disbursement refunds on future loans, just borrowing what I absolutely need.

Believe it or not our expenses are a little less than our income and I'll be adding a second job over the summer. Also we'll have reached our deductible on the med insurance so prescriptions will go down to about $300 a month.

We should also be getting an annuity from the death of my mom-in-law in about 2 weeks of about 4k. I plan to use that for atty fees and filing costs and of course I'll make sure that I get advice as to what to do with the rest of it.

I have just over a year on my car payments too which are $300, so I'd say that cleaning up the credit card debt will help immensely.

I'll confess that we had been pretty fast and loose with going out to dinner and buying expensive groceries and we've already made some big lifestyle changes in that area.

We've also got a big list of things to sell but I'm going to wait to talk to the attorney to make sure we don't make any mistakes in that department.

Thanks again, it's great to have some people to talk to who actually know what it's like to be in this situation.

[lrprn]

I was aware that student loans and secured loans do not get discharged in bankruptcy.

Actually secured loans can be discharged if you surrender the asset in your bankruptcy.

I will NOT be taking any disbursement refunds on future loans, just borrowing what I absolutely need.

Sounds like you are trying hard to keep further debt in check. Some members decide to take a semester off to gather up more cash rather than getting any more loans - takes longer to finish but the final debt load is less.

Do make use of the financial aid payback calculator to have a clear understanding of what your loan payments will be going forward, even if you do not have to pay interest.

I'll be adding a second job over the summer. Also we'll have reached our deductible on the med insurance so prescriptions will go down to about $300 a month.

It's great that you have some extra income coming in for the short term...whew! However, do keep planning ahead for what you are going to do when the second job income stops and the deductible starts up again next year.

We should also be getting an annuity from the death of my mom-in-law in about 2 weeks of about 4k.

This could be an issue for you because if you file within six months of receiving this annuity, your district could count this once-a-year inheritance as income. If that does happen, will you two still be under the median income for your state?

We've also got a big list of things to sell but I'm going to wait to talk to the attorney to make sure we don't make any mistakes in that department.

Great idea to talk to your lawyer first just in case. However, unless any of the items have values over $1K, chances are your trustee probably won't care.

Thanks again, it's great to have some people to talk to who actually know what it's like to be in this situation.

We've all been where you are in some way, so we're glad you're here! Being able to talk freely about all the tough financial stuff and not hold anything back for fear of being judged is such a joy!

[krielly]

ICHB

Just wanted to say "hello" from a fellow Vermonter. I'm glad you found us!
I do not have a lot of knowledge about Chap 7, as we filed Chap 13 old law, but keep posting. There are many helpful posters here. I wish we had found this site back when we filed, but am thankful for it now anyhow!
Keep posting and let us know how things go.

K

[sisterfunkhaus]

Bk does not affect your ability to receive more student loans if they are Stafford loans. They don't even check your credit for student loans.