not really OT: advice needed on student loansgreenspun.com : LUSENET : TimeBomb 2000 (Y2000) : One Thread
OK. Here goes. I hate to even admit this, but I have huge student loans and have not been able to start to pay them back yet. So far in the six years since I finished my last degree, I have been able to keep them in forbearance of one sort or another (financial hardship, etc.). Next fall, I'll run out of that. My problem is that I make only between $600-$700 per month (a bit more if I happen to get an extra consulting client) and my payments (which have been consolidated) are $600 per month. (My partner, who also can not afford much of anything is not legally bound to pay my debts, so the student loan corporation can't do anything about that.)
My question is this: Does anyone out there know what, if anything, the bank can do to get money out of me? Surely they can't attach my measly salary (which, since I work part-time for an electronic publishing firm, may soon be non-existent anyway)?!? I think they can attach my tax refunds, but that's not a whole lot of money either. I'm really worried about this (read -- anxiety attack) as we head into the even more uncertain financial times of y2k. I also need to keep pouring money into our preps so that we can weather the coming storm. Does anyone have advice or info?
-- Libby Alexander (email@example.com), October 14, 1999
Sooner or later you will have to repay your loans. It may someday keep you from getting a house, or a loan for that really nice new car you are wanting.
Things aren't going to go away like that. If there are problems, the systems will be recovered, and you will still owe the money.
I am not going to tell you to pay now or not. That is up to you, but you must realize that someday you will. Sorry. Please don't take it the wrong way, as it wasn't meant to be a nasty answer, just an honest one.
-- (firstname.lastname@example.org), October 14, 1999.
I respectfully disagree with "cannot."
Student Loan creditors will only ever garnish 10% of you income. First, consolidate your loans. Then "pay yourself first," i.e., make sure you have at least three months of cash in reserve, and are putting at least 10% of your income into long-term savings. Pay off high-interest card quickly, but if you have not done the above, and your monthly student loan payments would be greater than 10% of your income, you have no business paying off your student loans! Pay when you can pay, not before; student loans are not as credit-damaging as credit-card and other debts.
-- Dr. Polymorph (email@example.com), October 14, 1999.
I was placed in default on a student loan in 1981 after missing one payment. For years, I was hounded by the collection agency that handles student loans, demanding payment in full (now, they can only call once a day, and not at work - I learned, as did my kids, to recognize their calls and we would simply say "Thank you for calling" and hang up immediately). No one would ever take a payment, so I could not repay anything. After 7 years it went off my credit report. No big deal.
Then, the Dept of Education created a program for repayment in lieu of taking tax refunds (or, potentially, garnisheeing a % of wages, though it never came to this for me). I think this program is only for really old accounts like mine, that the collection agency abandoned. Anyway, they now bill me for monthly payments BASED ON MY ABILITY TO PAY, as determined by my income reported on my 1040. No more interest has accrued. I am simply paying down the loan and previously accrued interest, little by little. But this didn't even start until about 15 years after default.
So... bottom line... if you don't pay, the collection agency will want the full amount (or a huge monthly payment). If you don't pay that, they will keep your tax refund. Eventually, they will let you into the program I'm in. So - don't worry, have panic attacks or get suicidal. There are a few million of us in your shoes, and they basically end up working with us the best way they can.
-- (firstname.lastname@example.org), October 14, 1999.
Although it's not the "right thing to do", your situation is what the bankruptcy laws were written for. There are two types of bankruptcy- a chapter 7 and a chapter 11. In a chapter 7, the vast majority of your debts are forgiven. In a chapter 11, you are put into a court supervised program and repay a portion of your debts according to your ability to repay. Both leave you with a MAJOR stigma on your credit rating. In many cases, a chapter 7 bankruptcy will preclude you from being able to buy a car or home or being able to obtain employment in certain businesses or with the Federal government. However, bankruptcy doesn't have the social onus it once did. In some instances, creditors have new credit card offers for individuals within the month after a judgement is rendered.
Pardon me for asking this, but with multiple degrees, why are you only making 600-700 a month? My nephews make more than that at Wendy's working half-time.
-- chairborne commando (email@example.com), October 14, 1999.
thx to klintoon admin, student loans are not longer discharged in bankruptcy.
is DOE Y2k compliant? Worry about it next year & see if their computers work
-- doh (firstname.lastname@example.org), October 14, 1999.
You finished your degree 6 years ago and you're still only making $700/month? What was your major, White House intern? You're right, you shouldn't have admitted it.....
-- college grad (makingmorethanafrycook@Mc.Donalds), October 15, 1999.
Thanks folks, especially Dr. Polymorph and Another@fault. I just checked bank's web page on default and repayment. Does look like there will be some options somewhere down the road. That 10% garnishment of _disposable income_ puts my mind at ease a bit. In the meantime, I have another year of economic hardship deferment to go.
-- Libby Alexander (email@example.com), October 15, 1999.
Guys, it sounds like she's a writer. This has not been a good decade for the writing side of publishing, with the exception of best seller type people (maybe 200 people in this country at most), or with the exception of technical writers, who do fairly well. Writer-writers everywhere are in financial trouble big time, or else doing like me, and finding another line of employ
-- CD (CDOKeefe@aol.com), October 15, 1999.
Student loans cannot be included in a bankrupcy- since 1995 I believe.
-- Mike Lang (firstname.lastname@example.org), October 15, 1999.
Thanks for the answers, folks. [CD -- you're partially right...] Actually, I might as well have a phd in basketweaving. My degree is in theology and the teaching jobs are tough to get. In order to ever be considered for one I have to keep publishing (3rd book is soon coming out and I'm at work on #4), but academic books don't make a hell of a lot of money. Thus I work part time to get health insurance, have spiritual direction clients and do some consulting while trying to leave enough writing time so that I can keep publishing so that I might sometime -- sooner rather than later -- be able to land a professional job in my field. (pardon the long sentence) -- not to mention the house-stuff to keep our home running smoothly. My work days are often 16-18 hours long. Anyway, I'm in forebearance for another year and will then do some hard-core negotiating. And i n the meantime, we try to prep as much as we can so that we'll be around to do all those things! Thanks, all for various suggestions. peace, Libby
-- Libby Alexander (email@example.com), October 16, 1999.