Bankruptcy or Balance transfer on a school loan?

Question

Hello my girlfriend owes about $30,000 on a school loan which has a 19% interest rate, She got suckered into one of those art schools for fashion and graphic design but cannot get a job now.

Question, is it possible to take out a loan or combination of loans to pay of the school loan and or file bankruptcy? Or will there be some kind of trace or signature identifying the debt as school loan debt. I am in no financial situation to pay off 30k in loans off. Other factors are we have virtually no assets other than my car which is worth maybe $8000.

If she were to file bakruptcy prior to getting married would it affect my credit or just hers? and any suggestions on what route to take would be greatly appreciated.

thanks

Well she did have the loan in forbearence for a while but she is not in school and the loan is in default status now. I am wondering if there is a way to somehow eliminate the debt by transferring the loan balance to another loan then claiming bankruptcy or if there is another option because right now the interest is accruing at an incredible rate and it would take forever to pay off.

The loan was originally through sallie mae but has been transferred to edfund now, how would one find out if it was or is a federally insured loan?

Answer 1

Hello! Alright, alright everybody calm down! Guess what. Everyone is sort of wrong and sort of right. Here is the answer from the BK paralegal's mouth- (But remember! I am not an attorney!) Please seek out an Attorney if you decide to file- because while the Bankruptcy Code is a Federal law- the finer points still vary state to state.

First things first. Don't even think about transfering the debt to something else, (i.e. a credit card) and then filing bankruptcy on it. The creditor or creditor(s) are likely to cry foul- and if you have transfered this debt within a short period of time (like 4 years)- they are likely to get the debt reinstated because the transfer will be considered fradulant.

They are right so far in explaining that you cannot discharge (get rid of) a student loan, tax debt, or support debt through the bankruptcy. You will not be able to simply walk away from this debt without paying it back. But guess what- There is a bankruptcy designed to help you pay it back!

Let's assume that this company is not willing to work with you. (Please understand when I say "you" I really mean your "girlfriend" because if this is her debt, you cannot file on her debts). You cannot afford to pay this debt. Well, here is the other option. Your girlfriend may be able to file a Chapter 13 Bankruptcy. By doing this, you can add the student loan to the "Chapter 13 Plan." This is a plan that your attorney devises that tells the creditors how you plan to pay them back. It also allows you all of the Bankruptcy protection- meaning the creditor cannot harrass you, or sue you for non-payment, and basically it is a way for you to pay back the money on a payment plan that is more suitable to your income. Just remember though, this is still a bankruptcy, and you will have to include all of your debts (you cannot pick and choose which to file on) and be ready for the long haul because Chapter 13's generally are 3-5 years, and the minimum payment is $100.00 a month. The plan generally takes all extra income (you complete a income and expense sheet to tell the Court how much money you have after expenses are paid-but it's not so bad they allow you money for recreation!) and pays it back to your creditors. This may be a good option for your girlfriend. Most attorney's offer a Free consultation when considering filing bankruptcy, and so I strongly suggest talking to one (or two!) to weigh out your options and to see if you qualify.

As far as getting married, if your girlfriend files, and then you are to marry, the bankruptcy should not affect your credit whatsoever saying that there are no "joint debts". But that is a whole other "ball game", or so to speak. This is a tricky question, becuse there are many exceptions to the rule. This is really why you need to seek out legal advice from an attorney- Remember! I said they offer free consultations. Just gotta make some calls! :)

On a personal note, I filed bankruptcy myself, and married a month before my bankruptcy was complete. It has not affected my husband's prefect credit at all.

Hope that helps!

Answer 2

I filed a Chapter 7 bankruptcy and eliminated my school loan and all other debts. I was also given then option of keeping the car if the payments and insurance was caught up or giving it back and getting rid of that debt. Same goes for a house if your caught up on payments and insurance and taxes you have a good chance at keeping the house. But if your name is on any of her loans or credit cards the lender can come after you to make the payments because your liable for the loan or credit cards if she is unable to make the payments. Yes it will affect you if she files bankruptcy even after she is married if your name is on loans or credit cards. But if your filing bankruptcy with her then neither of you will have to pay those. If she has good enough credit to get a $30000 loan at a bank it will have a lower interest rate but she may need collateral. Or if she has one or more credit cards to tans fer the balance to (alot of credit cards have a 0% to 3.9% balance transfer rate, some have it for the first 6 months or year and some even has it for as long the transferred balance exist on the card).

Answer 3

Bankruptcy is NOT an option if this is a Federally Insured student loan. Hardship discharges in bankruptcy have extremely stringent requirements. There is also no defense of statute of limitations on these loans. Re Reading this I realized you stated 19% That being the case it may be a private loan which may be dischargable. Not knowing your state or other facts it is tough to answer more. A Bankruptcy would not affect your credit even if you were in a community property state since the debts were prior to your marriage. She should bring all her loan documents and school information to an attorney and see what her rights are. Nolo press at Nolo.com have a great book at their website on student loans. Get a copy.

Answer 4

Well, according to the lawyer that processed my bankruptcy last year, it is almost impossible to use bankruptcy to get rid of school loan debt.

If you have applied for any kind of credit together or you have credit cards and have her as a user (or vice versa) then your credit will be affected.

From experience, I can suggest that she take a class at a community college (or some local accredited institution) so that you can file for a forbearance on the loan (you don't have to pay the loan while in school).

Answer 5

You can't bankrupt a student loan.... I tried. And regardless of whether you're married or not, if she is the only one filing the BK, then it won't touch your credit at all. Your lives may be joined, but your credit is not. It may affect your chances and/or interest ratings if you go to buy a house or car or something else big...
I have no advice about the balance transfer thing b/c I've never done that route. Sorry. Good luck !

Answer 6

You can't eliminate school loans with bankruptcy, so that option's out.

Her debt won't affect your credit, as long as you never signed any of the paperwork.

Try speaking with a debt counselor or the cooperative extension in your area. Consumer Credit Counseling is a reputable one.

Good luck!

Answer 7

Unfortunately, you cannot file bankruptcy on a student loan. Have tried that one myself actually and I don't owe that much. There are lots of student loan consolidation loans being advertised (mostly on the web though), so that might be her only option in order to get a lower interest rate.

Answer 8

How to Avoid Bankruptcy Explained

With the rising consumerism, aggressive advertising campaigns and increasing incomes, people are living well beyond their means. As a result, they are burdened with heavy debts. If they are unable to repay the dues, they have to file bankruptcy. Bankruptcy is the last resort when you are reeling under financial problems....

Answer 9

This really sounds like a scam Fed school loans don't carry that rate, do a search to see if there have been any complaints filed against it.

Answer 10

seems such as you're up S*** Creek and not making use of a paddle . in keeping with risk get a activity , earn the 18k , pay your college . then circulate on from there , would be tuff and postpone your training for a 300 and sixty 5 days or 2 yet you is basically no longer the 1st guy or woman interior the international to easily might desire to pay on your guy or woman training. a minimum of you acquire the 1st couple of years for unfastened .