Jan
So my girlfriend is getting calls from collectors about the money she owes on her defaulted school loans. They are willing to give her a deal if she pays. The original amount was around 40 thousand dollars before intrest 6 years ago. She also has around 13 thousand on her credit cards. She is in the process of trying to get another loan so she can pay this one off but its not looking very good for her. She is about a year away from finishing nursing school and we had planed on getting a house in about 2 to 3 years, what should she do? Should she file for bakruptcy? I understand this will hurt our chances at getting a house but with this much dept I don't think it matters. She is backed up into a corner. Should she do everything she can to not file or should she just be done with it all and start building her credit over again?
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This is via Sallie Mae's website.
Unless you can show that your education loan payment is an "undue hardship" on you, your family, and your dependents, your student loans are ineligible for cancellation (discharge) in bankruptcy.
Answer:
She's in a corner because she didn't pay her bills. Not only is she trying to get yet ANOTHER loan, but you're considering sharing a mortgage with this girl??? My advice is to RUN!! As fast as you can…To the first responsible girl you can find!
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I believe you can not file bk on student loans. I am not positive but I'm pretty sure I have read that somewhere. She could file on her credit cards though. Maybe she could get the student loan company to work with her on the amount of her monthly payment. I know they can reduce them based on her income. She should just talk to them and see what they can do to help her and prevent her from destroying her credit.
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Bankruptcy does NOT erase student loans. She will owe those for the rest of her life, no matter what.
In addition, having defaulted on student loans is the worst thing she could have done. They offer endless payment options, deferment plans, etc. and there's no reason she defaulted.
That, in addition to her credit card debt, should be a huge red flag for you. AND, she wants to borrow more money to pay it off, instead of getting a second job or cutting back her expenses.
Bottom line, I wouldn't get involved with anything financial with this woman until she can straighten out her credit - and I don't mean by taking out more loans.
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You should find a new person to be with. Someone with those kind of spending habits don't change their ways. So unless you want her debt for when you get REALLY involved I'd get out now. That or demand some spending habit changes.
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I would read this article first http://www.adviceontime.com/Credit/Credi… so that you and your girlfriend learn how the whole credit system work, then based on your research then i would file for BK but keep in mind that a BK will not get rid of the Student Loans per the new BK laws enacted in 2005. So it might not be worth it.
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According to the IRS, if you claim bankruptcy, you cannot default on school loans. They MUST be paid back, so she will still owe $40K on the loans no matter what happens. If you get a house, it should be under your name only. Book Mark it-> del.icio.us | Reddit | Slashdot | Digg | Facebook | Technorati | Google | StumbleUpon | Window Live | Tailrank | Furl | Netscape | Yahoo | BlinkList