Husband & wife graduated from undergrad 15 years ago.
Both graduated with Master’s degrees 2 years ago (to increase job opportunities). Both before and after Master’s Degrees husband did not have full-time employment (or full-time wages) and was unemployed for a significant amount of time (higher amounts were taken on student loans for master’s degrees to compensate).
Wife has worked full-time while also going for Master’s part-time. Now husband also has full-time job and is finally starting to make full-time pay. Total student loan debt from all 4 degrees equals $165,000 (earlier loans have been in all forms of payment options – forbearance, income sensitive, etc – and new loans are currently in forbearance).
All loans will come due at the end of this year and the expected payment is around $1200 per month. Credit card debt equals $24,000 with the bulk of that at 26% and 29% rates – the minimum payments total $700 a month (and no new debt has been put on them for a while).
The house is underwater and the balance of the mortgage is $85,000 (6% rate) – the home’s value is unknown as the neighboring houses are selling anywhere from $20K to $80K. The neighborhood is not the most desirable and since moving in 6 years ago the house has presented issues that require a bit of remolding to return it to it’s state at purchase. (We would like to move for our child’s schooling in a different district and to leave our neighborhood which is becoming questionable in its safety.)
There is a lease on a car but father is paying the monthly payments as a gift. The other vehicle is 100% paid for. No late payments on any bills, always on time with mortgage, an fair (not great) credit scores. We do not take vacations, but clothes at thrift stores or get hand-me-downs, an live very simply in a small home.
Expected income for the next 12 months is $70,000 but with all current payments will not have enough left over in the budget at the end of the year to make the student loan payments.
Three years ago we made a plan for debt snowball to pay off all debts in 10 years (just in time to start paying for child’s college) but un- and underemployment derailed that plan. Bankruptcy has been suggested to us as a viable option, but we are hesitant.
Where should we begin? Is the best place to start a bankruptcy attorney to explore all the options? Does our situation laid out here help provide clues into which direction we should take?
If you have a credit or debt question you’d like to ask just use the online form. I’m happy to help you totally for free.Well Educated But Facing a Ticking Time Bomb of Debt. - Mike by Steve Rhode