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Hey ya'll, I'll try and explain her situation as best as I can, given my unfamiliarity w/student loans (thankfully!) despite being a college student. My mother made some misguided decisions which has resulted in her still being hounded by student loans at age 60, and over 20 years since finishing her undergrad. She didn't make much use of her B.A in Sociology either, my guess is because 1) it's a B.A in Sociology and 2) she was a single mother of two struggling to get by alone. I'd like to know what options are available, if at all, to relieve her of her financial headaches. Let me know if you need more info or clarification.
My mother had taken out several loans through her junior and senior colleges while gradually working on her undergrad between 1983-1989. Upon graduating in 1990, she unfortunately had trouble finding steady work for the next couple of years, which resulted in her income tax returns from 1990-1995 being garnished. By 1993, she was in default of her loans. She managed to get into an income-based repayment plan for her federal loans around 1995, but wasn't able to do so with her school-based loans. In 1996, she got a job as a paraprofessional at our local Department of Education, where she still works to this day. The position hasn't been a generously-paying one, however.
In 1999, she decided to consolidate her loans with William D. Ford, which came up to the amount of $30,290. Still unable to make steady payments due to her low income, she declared bankruptcy in 2003 to eliminate her debt, which was unsuccessful. Her loans were passed on to American Student Assistance circa-2005. Beginning in 2007, ASA started garnishing 18% of her annual income, and her debt ballooned to $41,000. She got that reduced to $33,000 after reporting it to the Department of Consumer Affairs and the Attorney General.
Flash-forward to the present, ASA has informed her that she's already paid more than $16,000 of her debt, but that she still owes the $33,000 they'd recently agreed on. She's claims that ASA is trying to stick her for more money than she owes, and that they've been inflexible in adjusting payments to her income. She's also concerned about retiring with student debt, and whether her pension and 401k will be garnished.
As she approaches retirement age, is there anything she can do to alleviate her debt, or has she frankly dug herself into a hole she can't get out of? To be honest, I believe the latter, but I'd still like to help the old lady in any way she can (short of her debt being passed on to me ).
student loans cannot be discharged through bankruptcy as she has already found out with her first bankruptcy unless there is extreme proven undue hardship......even if that was the case it sounds as though she has again gone into arrears on any new deal that may have been given in the first bankruptcy so she is again making things worse for herself
with new bankruptcy laws it will be much harder for her to declare a second time and her student loans will still not be forgiven unless some type of undue hardship can be proven and even then she will still probably have to pay most or all of the original balance left she would only hope to have some of the interest and late fees reduced
debts cannot be passed on to children or heirs unless those children or heirs signed for the loan as well......the repayment can be taken from any inheritance/estate though before the heirs get anything
she needs to contact whoever holds her loans, find out what the amounts are, find out what the minimum payments are, and what the minimum payment is to keep then current and out of default and start making arrangements to pay that amount
anything short of that will put her in arrears even further and the debt will continue to grow with interest and penalties
the longer she tries to avoid it the worse it will get and there is very very little IF anything that a court will do for her as she should know from her previous bankruptcy
Oh my. I feel bad for your Mom. If she is only 60, what about trying to get a better job with more pay? Maybe an education related job that might allow her to work at something more than a paraprofessional, which pays so low. Is she open to applying to new places? Can she get her resume together and start looking? I know at 60 one doesn't want to even think about this, but what else is there? With a sociology degree, she might qualify as a social worker for a state job, or as a case manager in a not for profit. Also sorta depends on where she lives. If in a larger metro area, maybe more chances for better employment. Good luck to her, and to you.
ditto texasvines, you will not be held liable for your mother's debt. But I'm sure she would like to live without this hanging over her head.
$33,000 is a lot of money, but it is not an impossible amount. It's hard but sometimes we have to cut back on expenses or take a second job to pay off debt. I've been there done that myself.
Yes, that was my very first thought: In 20 years, she hasn't made enough money to pay back some debt?? I'd like to know how much her net pay is every 2 weeks and what she spends it on. Cancel the cable tv, cancel the high speed internet, cancel the daily paper, stop eating out once a week, stop smoking, stop drinking beer, sell the car and buy a bike, etc.
It sounds like your mother is one of millions of sad examples of low-profile victims of our nation's higher education insanity. At least student loans will disappear when you pass away and won't follow you to Heaven or Hell (or will they?). Another way to get rid of them might be to flee the country.
I would like to think that making arrangements on a "realistic" payment amount and making the payment every month without fail is a fast way from under the thumb. Personal experience: Paid down about $18k in about 4 years to around 1500 and then knocked that 1500 out in 1 payment. Not a hopeless situation...just have to be realistic about what she will be able to afford and take into considerations future events. No matter what get that payment in the mail and it will disappear in no time.
student loans cannot be discharged through bankruptcy as she has already found out with her first bankruptcy unless there is extreme proven undue hardship......even if that was the case it sounds as though she has again gone into arrears on any new deal that may have been given in the first bankruptcy so she is again making things worse for herself
with new bankruptcy laws it will be much harder for her to declare a second time and her student loans will still not be forgiven unless some type of undue hardship can be proven and even then she will still probably have to pay most or all of the original balance left she would only hope to have some of the interest and late fees reduced
The only way you can discharge student loans through bankruptcy is to pay off that student loan with a credit card.
Then when you file bankruptcy, include that credit card.
Last edited by JanND; 01-25-2013 at 08:28 AM..
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