Student Loans in Default, Massive Credit Card & Medical Debt, and More. I am at the end of my rope

[yunalesca22]

I am so happy I found this board. Background - I am 27 years old, I live in the USA (midwest), and I have suffered from severe depression for most of my life which hit particularly hard in my early 20s.

During my 20s I screwed my credit up royally. Suffering from depression and anxiety, I just never paid bills (credit cards, loans, etc) and have let my debt rack up to the point where I have creditors calling my cell phone and my parent's house daily and I receive mail that I just throw away because I already know it's a debt collection letter. I have about $40K in student loans and I never graduated. I am 4 classes away from finishing college but I stopped attending in 2011 because I couldn't afford it and without a college degree, I have not been able to find a job that pays more than $40K a year. I have been unemployed on and off due to my depression but I thankfully found a stable salaried Executive Assistant job in October that pays $38K with benefits so I can start getting help with my mental illness.

 

Anyway, I didn't pay my federal student loans and now they have been in default since 2012. I have about $7K in credit card bills that have gone into collections, about $1K in medical debt that is also in collections, and a few other blemishes on my credit score. Last time I checked my credit score it was below 500 and I'm sure it's even lower now. I am thinking of filing for bankruptcy because I am drowning and I don't know where to start. I barely make enough money to survive on my own let alone pay down this massive debt but I need to try. I want to finish college and get my degree - first and foremost but I owe my school about $2500 before I can even re-enroll and then I probably don't qualify for student loans because I'm in default. I am trying to move out of my parents home but I can't get qualified for an apartment because of my credit score and poor financial history. I don't have any assets and I can't get any type of loan because of my credit. My car is probably one month away from breaking down and I desperately need to get another car (used of course) but can't qualify for anything but shady super high interest auto loans.

 

Over the summer I tried to commit suicide because of my debt issues but was unsuccessful. The stress in my life is so enormous I just don't know how or where to start to even fix this. Any tips are much appreciated. I am currently reading through all the newbie threads but I also wanted to make this thread. I have never told anyone but my parents about my debt issues and it feels oddly cathartic to finally type out all of my problems. My friends and extended family all think I graduated (I did the ceremony because I only had 4 classes left and my college adviser assumed I would finish over the summer) and have a great job and live this great life but I am just living a life. I am 27 and will be 28 in August 2015 and I just want to end my 20's and enter my 30's without this terrible burden.

[breeze]

We have experts on here who will give better advice than I do, now, but I can tell you one thing. There is nothing better for your self esteem than good credit. go for it!! It will keep you way above water emotionally, and if you start to slide back, just come on here and folks will rally around and boost you back up. It's hard work, but worth every second.

 

Read til your eyes bleed.

 

You are among friends.

[nysbadmk8]

Well the student loans are going nowhere. I suggest you goto studentloans.gov and look into consolidation, and IBRP. (And head over to the student loan section of this site)

 

If all you have is 8K in outstanding debt.. you arent doing that bad...

 

Do us a favor and LIST all your debts, to whom, and status on your reports.

 

Have you pulled your paper reports yet?

[JayB27]

We have experts on here who will give better advice than I do, now, but I can tell you one thing. There is nothing better for your self esteem than good credit. go for it!! It will keep you way above water emotionally, and if you start to slide back, just come on here and folks will rally around and boost you back up. It's hard work, but worth every second.

 

Read til your eyes bleed.

 

You are among friends.

+1---Great advice.

 

The main thing upon arrival to CB, is to feel like you are not alone.

 

And you are not. We have all been in a similar situation, which is why we are here.

 

With my newly clean reports, I'm king of the world. (or at least I FEEL like it)

 

ETA: Not to mention, Moms always know how to make us feel better

Edited November 21, 2014 by JayB27

[deemac]

Definitely, you want to finish that degree. You have way too much invested to let it go. I understand about the mental illness. I've experienced depression and my son just took a semester LOA from college.

 

Bankruptcy won't eliminate the student loans. If you have $8k in other debt and that's truly all it is, you will probably be better off dealing with it.

 

Take advantage of the health insurance to get yourself in a state where you can deal with things. Do go to studentloans.gov. Find out about consolidation and rehabilitation. I don't know a lot about student loans, but there may be percent of income plans that would help you.

 

Make a plan to finish the degree. In the long term, that will help you more than anything else.

 

When you have some money set aside, try to negotiate settlements with your creditors. It doesn't hurt to suggest you're considering bankruptcy and offering a settlement as a last ditch effort to avoid it.

 

Once the accounts show as "settled", wait about six months and then start trying to get them deleted.

 

Set up auto-pay for minimum amounts on all your current debt so that if you're having a bad spell you don't have to keep track of them. You can always pay more if you want to, but at least you won't get late pays and fees.

[mendelssohn]

Well the student loans are going nowhere. I suggest you goto studentloans.gov and look into consolidation, and IBRP. (And head over to the student loan section of this site)

 

If all you have is 8K in outstanding debt.. you arent doing that bad...

 

Do us a favor and LIST all your debts, to whom, and status on your reports.

 

Have you pulled your paper reports yet?

Good advice. Definitely tackle the student loans first. The sooner you get them in good standing the better. They will haunt you forever if you do nothing.

[Mustard on Fries]

...well, I won't offer any credit advice since that's already being taken care of, but I would like to say welcome to the Creditboards family. There are a lots of people here who have been in your situation, and we're here to offer support.

 

And I agree with the catharsis. It does feel great to unload it. Remember, you can unload all of that crap here, and no one will think less of you for it :-)

[ubercat]

Paper reports can be had at the numbers in my siggy.

[Momof5]

If you can, rehab your student loans. When they are rehabbed, the lates are supposed to disappear. If they won't rehab, then consolidate. Go to Direct Loans and apply. (DO NOT forget to give them the signed forms they need!). When you consolidate defaulted loans, they become 1 new loan that is current and you request the IBRP (income based repayment program) The downside to consolidating is that they will not remove the lates of the old defaulted loan.

 

I had one son who consolidated and I have one son who is rehabbing (payments $5/mo).

 

Between the CC balances and the medical collection, you really don't want to file BK. It isn't significant enough to trap yourself for up to 5 yrs on a BK13. I would list here who you defaulted on and who is the CA that now has the accounts and WHEN you defaulted and the state you live in. With that information (acct #'s redacted), we can give you better, more specific advice.

[almostanonymous]

Although they aren't identical, I can definitely relate to your situation.

 

I had a lot to deal with personally in my mid to late 20s and, even though I was fortunate enough to finish my degree, I just ended up letting the tuition bill slide, along with everything else. I couldn't get a phone without a $500 deposit. It was hard to find a place. Collection phone calls left, right, and center with one unopened collection letter after another. I hoped that if I just put it off long enough, eventually it would all go away and I could start fresh.

 

Luckily, there were a number of charge-offs that ended up falling off and are not well outside of SOL and beyond the 7.5 years reporting, so what I was left with was basically a pile of student loan debt that had defaulted. This is the number one thing you're going to have to deal with, as it will never go away. You're going to want to get in touch with the agency who's servicing the loans and try to set up a rehabilitation plan. After 9 agreed to on-time monthly payments, you will get your loan out of default status and can qualify for a variety of income-based repayment plans. At that point you will also be eligible to reapply for financial aid, which could put you in a place where you can finish your degree and go after some better paying jobs that can help you begin to chip away at some of the other obligations.

 

There is always hope, no matter how difficult things seem. It's going to take a lot of dedication and hard work, and a lot of sacrifice, but rest assured you can get it done. Your best best for tackling your other issues would be to post the specifics of your debts, their ages, and to whom they are owed. People here will be more than willing to give you at least a start on where to go, I don't know where I would be without the reading I've done here and the thankless help of the members.

 

Best of luck.

[whipster]

If you are found as 100% disabled, your student loan obligation can be discharged. This is not bankruptcy. It does need to be a federal loan though. If your depression issues continue, this may be something to look into.

 

http://www.disabilitydischarge.com/TPD-101/

[xelda]

It sounds like you're actually doing better than you think. $48K is a manageable debt load, and a $38K salary in the Midwest is pretty good. I know plenty of people who finished school and made less than that--and still continue to make less than that many years after school. I think they become comfortable with that kind of salary because they have no debt. I'm in way more debt than you are, but that is what gives me the guts to always push for higher salary.

 

Here is what I recommend:

 

1) Rehab your loans. This will put you on track to being eligible for federal aid again. It requires 9 consecutive months of on-time payments. You can probably negotiate a very small payment. By rehabbing, this will get your student loans out of default status. However, it will NOT remove the lates. But whatever, we'll deal with this one step at a time.

2) While you're rehabbing the loans, be a total rockstar at work to advance your career and establish a good reputation. When it's close to a year, push for a raise. Do your benefits include tuition reimbursement? If not, that's ok too. You can manage without it.

3) Contact your school to see if you can negotiate a payment plan to get the $2500 paid off.

4) Use this time to take care of yourself. Get help with your medical illness. Get into the groove of your job (it took me about 1-2 years to settle into my first salaried job). Stay current on your student loan payments. I think you should try to do PFD (pay for delete) on your credit cards. This will improve your credit scores.

6) Let's say at the end of 1-2 years, you've finished rehab and paying off the $2500. That means you're able to enroll AND apply for federal aid again.

7) Start school again but maybe only take 1 class at night so you can continue to work. It'll take you longer to finish, but this will be better than trying to take too many classes and having to drop them. If you're able to take 2 classes (half-time status), you can defer your student loan payments. If the loans are subsidized, they won't accrue interest until you graduate.

6) So let's say 3-4 years from now, you've finished the degree. And now you have 3-4 years of professional experience on your resume so you can start climbing up ranks if you haven't already. In your early 30s, that's a great place to be. If it makes you feel any better, this is currently where I'm at. I didn't even know what I wanted to do for a career until I was 27. But when I look at other people my age (I'm also in the Midwest), I don't feel like I'm far behind in terms of being successful.

[yunalesca22]

Thank you thank you thank you for all the advice everyone. I took a long hard look at myself yesterday and did some meditation and I know I am ready to tackle this. I know I am ready to deal with this. Thanks for all of the suggestions and supportive comments. It means more to me than you all will ever know. I want to live a better life without insane debt and it will take hard work but I know I can do it.

 

I am going to pull all my reports this weekend and call my student loan collection agency to set up a repayment plan. I only get paid once a month at my job so I need to make sure I am smart with this so I can have enough money to survive each month. I am also going to spend the rest of the weekend reading all the guides and important threads on this site.

 

For the first time in a long time, I am hopeful.

[DAR77]

I agree with breeze. Also from what i calculate your debt isnt that massive. To you, right now it seems massive and uncontrollable. When i was heavily in debt, reposession, credit card etc it was around 30k. I didn't know what to do, i was just throwing in the towel. Now with the knowlege i know now, and what you will learn here you can handle it. Remember its not going to happen over night.

 

What i would do 1st is see where you really are and work with the collection agencies, ignoring the letters isnt going to do anything at this point.

 

Good luck

[shifter]

You don't have near enough debt for bankruptcy let alone suicide.

 

You just need to get a handle on where you are and work on a plan.

 

You can have that paid off in no time.