Legitimate to help wipe credit card debt to student loan proceeds?

[aaengel]

Well, so far I've had one credit card company offer me 5 years of interest free payments to pay off a card with a balance of over $14,000

Anyway, I originally had my student loans extended to help cover the cost of a car, but I don't think I need a car yet... so would it be legit to shift some of the $3500-$4000 balance of one card onto the student loan proceeds to help pay off the card, and just deal with it later? I know I'm still dealing with the debt, but I gotta get these cards down...

I'm being absolutely chastised on this forum because of my finances... www (dot) fiero.nl/forum/Forum6/HTML/091125.html

I'm trying to take the high road and not file for bankruptcy ultimately.

[mountanddo]

I'm being absolutely chastised on this forum because of my finances... www (dot) fiero.nl/forum/Forum6/HTML/091125.html

Of course you are. You are posting about your finances and that you are contemplating bankruptcy on a sports car forum. Also, anyone who lays out all their debt and then ends it with "and I was planning on taking a trip for spring break to Florida" deserves to be chastised. Sorry, anyone with that much debt who is even thinking about taking a trip isn't broke enough yet. Just my .02

Sits quietly and waits for the responses that I'm being too hard on you....

[doni49]

Well, so far I've had one credit card company offer me 5 years of interest free payments to pay off a card with a balance of over $14,000

Anyway, I originally had my student loans extended to help cover the cost of a car, but I don't think I need a car yet... so would it be legit to shift some of the $3500-$4000 balance of one card onto the student loan proceeds to help pay off the card, and just deal with it later? I know I'm still dealing with the debt, but I gotta get these cards down...

I'm being absolutely chastised on this forum because of my finances... www (dot) fiero.nl/forum/Forum6/HTML/091125.html

I'm trying to take the high road and not file for bankruptcy ultimately.

Well if you do use student loan money to pay cc debts, you're converting dischargable debts to non-dischargable debts. Which means that if (when) you do eventually file bk, you'll still have to pay this.

[HHM]

so would it be legit to shift some of the $3500-$4000 balance of one card onto the student loan proceeds

Legit? sure; smart? absolutely not!

Understand where the "high road" eventually leads....a cliff

Be smart, bankruptcy is a financial tool and student loans are not income and should be avoided. If you have debt and can't pay it with your income, then bankruptcy is the solution tailor made for that scenario.

[LadyInTheRed]

I'm trying to take the high road and not file for bankruptcy ultimately.

This comment is offensive, especially in a forum full of people who have filed, are preparing to file, or are contemplating filing bankruptcy. Bankruptcy is a legitimate way to deal with debt. It should be a last option and avoided if you are reasonably able to pay off your debt without it. If you can avoid BK, great. But, that doesn't make you better than those of us whose best option was to file BK. Instead of asking your pastor for help buying a vehicle you can't afford, ask him about bankruptcy and the bible.

The members of the other board gave some good advice even if some are misinformed about bankruptcy. You need to get your priorities in order. You are in debt and should not be spending money to satisfy your wants. In your last post on that thread you say: "Forgive me if I want to enjoy my Spring and Summer time... it's not exciting driving a car when I love motorcycles." Transportation doesn't need to be exciting. Buying a motorcycle was a bad financial decision in your circumstances. There are many ways to enjoy Spring and Summer without buying things you can't afford. You need to start making better financial decisions if you don't want to be a slave to debt for the rest of your life.

I agree with HHM that using non-dischargeable student loans to pay off dischargeable debt is a bad idea. Many members of this board made similar mistakes trying to avoid bankruptcy only to find themselves later regretting it as they realized they were only putting off the inevitable. I took a $16,000 loan against my 401k to pay off credit card debt a year before I filed. If only I knew then what I know now! But that's the past. I've learned, have made the necessary changes in my habits and am moving on.

You haven't provided enough information here for us to help you determine whether bankruptcy is the best option for you. You did say in your other post:

I owe around $4000 to one credit card, $1900 to another card, $350 to another, and $14000 to another ( of which I'm in a payment plan for $235.01 per month for 5 years, no interest).

I turned my 2001 corolla back into the credit union in December due to the engine issues, still owe $3800 or so... Hasn't sold yet, I will be held for the difference...

I owe $36,000 for student loans

Other information that will help is what is your current gross income? What is your living situation? Do you rent your own place, live with your parents or with roommates?

If you are willing to make the necessary changes in your habits, this board can be very helpful. But remember that we will tell you how it is, just like the members of the sports car board did. We are just more educated about bankruptcy than many of them are. Tough love is administered liberally here when needed. But know that it is with the intent to help you, not beat up on you.

[aaengel]

Income is highly jumpy... during winter time until mid-April I get 7-15 hours a week, with most of the money being $11.15 an hour. From Mid-April until June I can get 35-40 hours a week (Base pay is $8.65 an hour on weekdays, $11.15 an hour on the weekends, generally, work 9 1/2 hours on Saturdays and 7 1/2 hours on Sundays, with the rest throughout the week...), July and August slow down again to 20-25 hours a week, Mid-Septmeber to Mid-October picks up again, then slow until Black Friday to Christmas. Going to school full-time this semester with 12 credit hours, two science classes, and a math class. Will probably take at least one class during summer then some more during the Fall.

Also, I live with my parents, but I'm 25 and can't afford to live on my own... I drive 60 miles almost everyday with a car that gets 35 MPG. So I have to fill-up every 4-5 days at an average of $3.39 a gallon.

With that said, should I still and try to get a new car with the money I'm getting back from the loan (the car I'm driving is 13 years old... and getting rotten)? Should I keep driving the Metro and bounce some of my credit card debt to the student loans, and just get it paid down that way? Should I bankrupt? Am I bankrupt?

Should I just reuse the proceeds coming back from the student loans to continue paying for the classes during summer and fall, and still bankrupt? (Credit hour is $83.00)

[LadyInTheRed]

Let me rephrase my income question. What was your gross income in the last 6 months? If you divided that by 6 and then multiply by 12, is the result $43,677 or less?

Lots of students live with their parents. In this economy, lots of college graduates have moved back in with their parents. You do not need to justify your living arrangements. I ask only because it is relevant to a BK filing.

No, you should not use your student loan to buy a car or pay of credit cards. Student loans are not intended to get you out of debt. If you are going to spend it on anything other than educational expenses, don't take the loan. You already have $36,000 in student loan debt that you are stuck with. That's a lot of debt! Stop making your situation worse. If your can't get by with your current car, drive to school on your new motorcycle. If weather prevents that, sell the motorcycle and buy a used car.

Are you bankrupt? If you stop using credit, can you pay your living expenses (needs, NOT wants) and credit card payments? Do you have assets you can sell to change that? If not, then you are bankrupt. My guess is that your income is below the $43,677 median for Michigan which means you should easily qualify for a 7. But that will not solve your problems if you don't stop incurring debt you can't pay and increase your student loan debt unnecessarily.

When I was in college, we had a choice between student loan and work study. Is that still the case? If so, take a job instead. Work study jobs were actually a lot of fun. It was a great way to meet other students and get some work history for my resume.

[tobee43]

Hhm: Understand where the "high road" eventually leads....a cliff

GREAT one HHM!!! that should be a bumper sticker!!!

[bcohen]

Here's a novel idea: if your actual educational expenses are less than the amount you borrowed, send the money back to the student loan provider, thereby reducing the amount of non-dischargeable debt you will owe in the future.

Why would you pay unsecured creditors with this money, especially considering that you are a full-time student who does not own anything which the creditors could take from you? Quit paying on those debts, let the accounts "charge off", and until and unless you are sued, do nothing. If you are sued, then that is what Bankruptcy is for!

[HHM]

GREAT one HHM!!! that should be a bumper sticker!!!

Thank you, that was a spur of the moment Gem

It is copyrighted to me now

AND

I totally agree with bcohen, if you actually have excess student loans that could be used to pay off unsecured debt or buy a car, SEND THE FUNDS BACK, you are mortgaging (and probably burying) your financial future by taking more than you need now.

[aaengel]

Let me rephrase my income question. What was your gross income in the last 6 months? If you divided that by 6 and then multiply by 12, is the result $43,677 or less?

Lots of students live with their parents. In this economy, lots of college graduates have moved back in with their parents. You do not need to justify your living arrangements. I ask only because it is relevant to a BK filing.

No, you should not use your student loan to buy a car or pay of credit cards. Student loans are not intended to get you out of debt. If you are going to spend it on anything other than educational expenses, don't take the loan. You already have $36,000 in student loan debt that you are stuck with. That's a lot of debt! Stop making your situation worse. If your can't get by with your current car, drive to school on your new motorcycle. If weather prevents that, sell the motorcycle and buy a used car.

Are you bankrupt? If you stop using credit, can you pay your living expenses (needs, NOT wants) and credit card payments? Do you have assets you can sell to change that? If not, then you are bankrupt. My guess is that your income is below the $43,677 median for Michigan which means you should easily qualify for a 7. But that will not solve your problems if you don't stop incurring debt you can't pay and increase your student loan debt unnecessarily.

When I was in college, we had a choice between student loan and work study. Is that still the case? If so, take a job instead. Work study jobs were actually a lot of fun. It was a great way to meet other students and get some work history for my resume.

Not using your formula I made around $16,000 gross for all of last year. That was with 2 part-time jobs...

As for making the payments, I don't have enough to pay for everything... everything that is a need. As for assets, I've sold a bunch of stuff within the last year, there's probably a few more things that could be sold, but they won't come close to paying off the big debt...

As for the motorcycle, I haven't actually fully bought it yet, only put a $100 down... I could technically walk away and only lose the $100 if need be... though I would like to at least have an enjoyable hobby over the year... I love bikes. If I still got the bike next month with my tax refund, and then filed for bankruptcy during the summer... would that look bad with the bankruptcy court? If I did use the money from the student loan proceeds to get a car, and still filed for bankruptcy during the summer, would that look bad as well? (I do want to mention, student loan proceeds can be used for transportation, and a car is transportation....). LMK

[HHM]

Well, I think we have no choice but to chastise you as well on this forum for your finances. Seems like one bad decision after another.

At least most courts don't equate fraud with stupidity, so at least you might be able to claim stupidity as a defense

[mountanddo]

In your first post you said you were thinking about getting a car with your student loans but you had decided that you didn't really need one. Then you say your car is 13 years old and "getting rotten". You've pretty much ignored what responses you've gotten here and continue to ask if you can use your student loan proceeds to pay off your credit cards. The advice you have gotten is that using secured debt to pay off UN secured debt is a stupid move. What exactly is it you are asking? I don't know if you could get into a sticky situation if you pay off credit cards with what should be used for school expenses which is what I think you really want to know. Even if you did that, it doesn't begin to discharge the debt you have. Paying $4,000 on a $14,000 debt really isn't going to help you much. I think what you might need more than BK right now is financial counseling. Even though you are deep in debt you are still thinking about spring break trips and buying a motorcycle.

[jst4f]

I am beginning to understand why the BK laws were changed in 2005.

[tobee43]

HHM]Thank you, that was a spur of the moment Gem

It is copyrighted to me now

well alright, however i can handle the manufacturing and distribution!

aaengel, you do really need to send those funds back. don't do any shifting of funds, turn the car in for a cheaper more affordable one. i don't know if a "high" road includes diverting funds to a place they were not earmarked, you may best serve yourself by taking some of those funds and taking a money management course or two. that would at least help you in the future to better manage your money and finances.

invest in your future and educate yourself, it will pay you back ten fold.