Studend loand, non-dischargable, what happens if you can't pay?

[bnkrptinva]

Husband is about to finish up school which he has been working on, off & on, for quite a few years. When we tally up his total balance he owes Sallie Mae, ouch. I've looked at their site, they have different payment options depending on various situations, but what happens if their best deal they can give you (lowest payment) isn't low enough?
Has anyone here been able to work with them to just "send them what you can" each month? Loans were not in my name and were pre-marriage, what impacts to my credit will his loans have?
Does Sallie Mae sue people, or can you just kiss your credit goodbye if you can pay the minimum much less ever pay off the balance?

[keepmine]

They don't have to sue. They can place an adminstrative garnishment against your husband. These things don't go away. They can even garnish his SS when he retires.

[bnkrptinva]

I guess baby will have to go into daycare as soon as he can land a job and start to pay this. We are planning on it being 600 a month for 30 years. Wonder though if we talked to them, if they would take like 100 or 200 for now, until more money comes in at a later time. We've both filed bankruptcy....he has no other debt except this (because this could not be taken away). I have a car payment....and an irs bill which I'm hoping to have knocked out in 2 or 3 years....short of that..unless we stop buying groceries, not sure how we are going to come up with 600 a month. : (

[Amy26]

Wow... those student loans must be quite a lot... I have a 50k or so balance with sallie mae and the payment on it would only be 223.

You should be able to go into voluntary forebarance with Sallie Mae. I have not paid on any of my student loans since I got my undergrad like 4 years ago.

You can actually apply for it in your online account management. You can also forebare private student loans with them but you have to call them up and pay llike a 50 dollar fee for 6 months of forebarance.

Each loan should have a "forebarance allowance" ... it tells you how long you would be able to do it. Also, with Sallie Mae... if you refinance the loan (which I have done once already) the forebareance period starts over again.

Mine were defaulted to 60 months of forebarance allowance. Private loans are a bit lower... like 24 months or something.

While you don't have to pay it, it still accumulates interest. Mine interest rates are like 3 and 4 percent so it really isn't a whole lot of money considering the alternative of having to pay it monthly.
Hope that helps.

[bnkrptinva]

Amy, it's probably going to be close to 75,000. I am looking at calculators, and it's tell us so much more than what you have (if I added 1/3 more to what you pay).

I guess when he gets out, and the deferment period is up, he's just going to have to get on the phone w/them and see what we can do. I'm really hoping not to have to shell out 600 or more dollars a month. Kind of eats up the money created by filing bankruptcy.

Thanks for the info..I'll check the link as well.

[Amy26]

Yea I understand...600 is a lot! I can't see why they wouldn't let you do the voluntary forebarance thing. Like I said I've been doing it for years. It doesn't even really require much approval. Personally, I go online and fill out a forebarance request each time I become due again and electronically sign it. The next day its usually approved. You don't have to send them a hardship letter or anything.

I assume these are federal loans? If they are private then its a little different.

[bnkrptinva]

I think only 6,000 is not federal (actually, it might be, but there is a co-signer, and I know to defer it, he's had to pay 50 bucks every six months or so...so not sure about that one).

Perhaps we'll pay that one for now..keep forbearing the other ones...at least for a short while, till baby gets a bit older and/or the job market opens up for hubby to pay in full.

There is something available that reduces it some..it's a 25 year plan, they use a formula to determine what you can pay, you have to give info each year upon filing taxes, as the amount may change, then after 25 years, they write the rest off.
That would probably take us down to 430 or so...even still...a bit much for us right now with him not working and an infant on the way.

[Amy26]

Yea, if you have to pay 50 dollars for the 6 month that's a private one. If you can't afford it, its probably best. Its there for that reason to use. That 25 year plan thingy sounds a lot like chapter 13. I may have to do that at some point. I have a ton of student loan debt that I wish could get discharged but I guess I'll have to suck it up.

I'm actually curious how I'm going to finish my master's degree after bankruptcy. I'm in summer session right now and I owe the school for this semester but I can't pay it. I get tuition reimbursement from my work but can't do it till I get a grade. Usually, I get a loan to pay it or use a credit card...but after bankruptcy I dunno how that's gonna work or if they are gonna let my summer session money go and I can pay it in 2 months with tuition reimbursement.

This bankruptcy stuff is so complicated. I'm so afraid I'm gonna do something stupid or some little thing I buy that they are gonna freak out about. I keep reading about people having to downsize their apartments and such and my lawyer actually told me to get a more expensive place. He also told me I can get furniture and don't worry about the receipts... o.O

[bnkrptinva]

I guess we'll do the voluntary forbearance for as long as we can, and maybe send something..whatever we can swing during that time, as it'll at least chip away at it.

Once husband can go back to work...his job will have to pay the loans and daycare cost.

He wants a car...I want lots of things..but all of that will have to wait until either I get raises & promotions and/or the car we are paying on now is paid for. I can't swing anything more than what we are doing (and currently would not be able to pay the full payment on his loans....even that will have to wait several years).

[bnkrptinva]

My bankruptcy attorney was kind enough to give me some info on this.

Said husbands student loan has no bearing on me though we are married, HOWEVER, if we file taxes jointly, and get a refund, it could be taken by the lender if he's in default.

Basically, I think what he's going to need to do is keep in contact with the lender, and keep up forebearance until he goes back to work. Meantime, we might be able to send a little money each month, which hopefully will keep his interest down.

Once he gets a job, I'll want him filing separately from me, as I'll want his income only used for payback purposes. I'll see if he can use Sallie Mae's 25 year payback where you only pay a portion of what you would under a 10 year plan, based on income & poverty amounts for your area & household size.

So, we may not get the best tax break ever if we do this, but it'll keep his payments down, it'll keep me from being accountable for his payback (because if you file together, they look at your spouses income to for payback guidelines). I think the tax break we would lose would be not that bad compared to having a huge monthly payment on the loan.

Attorney also said lenders of student loans are pretty liberal about when you need to temporarily suspend paying, or reduced paying, but the key is to stay in contact w/them and don't default..I think that's when things could get ulgy for husband (which would affect me).

[whipster1]

Look into a FEDERAL DIRECT consolidation, get sallie mae out of the picture. You can get an income contingent repayment plan. Currently since I was out of work my payments are zero.

http://www.loanconsolidation.ed.gov/ note this is a federal link so should be ok.

[bnkrptinva]

Thanks for the link whipster. SM has one of those also, but right now, I think there are 2 loans, so this might be an option to consolidate (I actually had to do a consolidation when I had loans, and was able to do though SM also, but fortunately, my payments were managable).

****************

bummer, just checked the link, if we are married, my income has to be part of the income repayment is based on. Loans were before marriage, I can't afford his loan. SM has one where as long as we file taxes seperately it's only based on his income, which is fair to me being that my income supports us all, shetler, healthcare, food, transportation...I can't also be expected to pay his student loan..that's what his job will do when he gets one.

[dingdong]

Apply for a William Ford Consolidation loan. Ask for Income Contingent Repayment Plan. Request a hardship forebearance for 6 months, then when you file 2009 taxes, file seperately.

IF they only look at his income, it may make your payments very reasonable.

[bnkrptinva]

Apply for a William Ford Consolidation loan. Ask for Income Contingent Repayment Plan. Request a hardship forebearance for 6 months, then when you file 2009 taxes, file seperately.

IF they only look at his income, it may make your payments very reasonable.

Dingdong, I looked it up, and unlike SM, they say if you are married, spouses income has to be a part of the income contingency plan. On SM's site, they say specifically if you are married, if you file taxes sepearately, only the borrower's income is counted. I'd totally do the WF loan if they had that blurb in the description (maybe it's so, but that's not what their web site says, only that married people, spouses income counts too).

Here's the verbiage from their site on married borrowers:
"Income Contingent Repayment
(not available for parent PLUS loans)
This plan gives you the flexibility to meet your Direct Loan obligations without causing undue financial hardship. Each year, your monthly payments will be calculated on the basis of your adjusted gross income (AGI, plus your spouse's income if you're married), family size, and the total amount of your Direct Loans. Under the ICR plan you will pay each month the lesser of....."

[dingdong]

Try using the payment calculator( I think it is at the bottom of the screen) and select ICRP as an option and see what your payments are with both your incomes.

That way you can see which program is best. SM probably has a similar calculator on their site for the various plans, extented , graduated, etc.

Does SM offer ICRP? I can't remember.