Student Loans, Default, Options

[Mishra]

So... I married someone who has 160k in student loan debt. She is almost in default.

 

120k is private, 40k is federal. This debt is all hers because it happened before the marriage. Interest rates are at 13% and Salliemae refuses to consolidate or do anything to help her unless she signs up for automatic payments from her checking account.

 

I just so happen to have 160k... But it would deplete everything I have.

 

I feel like I have 3 options:

 

1) Pay it off...

 

2) Wait until the inevitable Congress passed programs come through and hope it applies to private student loans.

 

3) Wait until the law is changed where student loans are under the same catagory as other debt in bankruptcy law.

 

Opinions?

Edited May 25, 2013 by LynnInMN

[LynnInMN]

 

1) Pay it off...

Have you considered bringing it current and just making the monthly payments???

Are her Federal loans consolidated.

 

2) Wait until the inevitable Congress passed programs come through and hope it applies to private student loans.

Which program are you referring to?? Most do not apply to private student loans.

 

3) Wait until the law is changed where student loans are under the same catagory as other debt in bankruptcy law.

If the law on bankruptcy goes back to where it was, the loans would not be eligible for bankrutpcy for 5-7 years after the loans become due. That will force lenders to file suit immediatley after default and pursue garnishment and leins for as long as they can.

Opinions?

Edited May 25, 2013 by LynnInMN

[305_sigma]

If she is hasn't defaulted yet she can apply for an income based payment plan which will reduce her monthly payments for her federal loans. I'm not sure what her options are for her private loans.

[LynnInMN]

There are no options for private loans. Was there a cosignor on these loans??

[Mishra]

 

 

 

1) Pay it off...

Have you considered bringing it current and just making the monthly payments???

 

Thanks for replying! The interest rates are well beyond anything that makes sense. (9-13%) I will never make any money off of that.

Are her Federal loans consolidated.

 

They are not. She has tried to consolidate her private loans but they wouldn't do anything.

Which program are you referring to?? Most do not apply to private student loans.

 

It's the program that hasn't been created yet. Meaning I wait and gamble for a program that would apply to private loans.

 

 

2) Wait until the inevitable Congress passed programs come through and hope it applies to private student loans.

 

3) Wait until the law is changed where student loans are under the same catagory as other debt in bankruptcy law.

If the law on bankruptcy goes back to where it was, the loans would not be eligible for bankrutpcy for 5-7 years after the loans become due. That will force lenders to file suit immediatley after default and pursue garnishment and leins for as long as they can.

Opinions?

[Mishra]

If she is hasn't defaulted yet she can apply for an income based payment plan which will reduce her monthly payments for her federal loans. I'm not sure what her options are for her private loans.

 

Thanks for replying! She hasn't defaulted yet and we have thought about income based payment plans for the federal loans. But the interest rates and situation with the private loans is where we are having problems..

[Mishra]

There are no options for private loans. Was there a cosignor on these loans??

 

Right... Other than potentially HR 532 coming into law or some other programs made in the future.

 

Well, I didn't want to mention it in order to keep the situation clean, but about 30k of the private loans have a cosigner on them.

[hodap2001]

Wells Fargo offers Private Student Loan Consolidation (https://www.wellsfargo.com/student/consolidateloans/privatestudentloans/); therefore, this may be an option for you and your wife. In addition, I strongly recommend that your wife consolidate her Federally backed student loans through Direct Consolidation Loan (http://www.loanconsolidation.ed.gov/).

 

Please remember, that you do not want your wife to default on the student loans; otherwise, severe consequences will occur (i.e. bank levy, administrative wage garnishment, social security offset, tax offset, judgement lien, etc). Do not delay.

 

Good luck to you!

[LynnInMN]

 

Right... Other than potentially HR 532 coming into law or some other programs made in the future.

 

Well, I didn't want to mention it in order to keep the situation

clean, but about 30k of the private loans have a cosigner on them.

IF HR 532 is passed, you are still not free and clear. It will essentially return the bk laws where they were before which requires that you be in repayment or default for 5-7 years before the filing. This as I have stated before will force lenders to file law suits a lot quicker and use whatever remedies they can use (garnishment, levies) prior to the borrowers ability to file. And even if you file, that will leave the cosignor on the hook.