Get Out of Debt Guy - Steve Rhode

I Just Finished a Chapter 13 Bankruptcy But Have Parent PLUS Student Loans and National Collegiate Student Loan Trust

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Question:

Dear Steve,

Just got out of Chapter 13 Bankruptcy (finished all five years faithfully). NOW am getting tons of student loan (Parent Plus) for my two kids. I lost my job over a year ago and was forced to take early social security at 62. Could NOT find a job I could do. I had an injury to leg. So out of my social security check I have to pay health insurance, and expenses…. I NEVER thought I would be in this helpless state; no money, old car, and strapped with almost 85K of loans. (I had an excellent job). I feel like I’m in a catch 22. JUST received a letter from National Collegiate Student Loan Trust 2007-4. Delaware Statutory Trust, demanding payment. They had my last name misspelled.

How do I pay back Parent Plus and co-signed loans of over $85k for two students, when I’ve lost my job, injured my leg and at my age (62.5) can’t find anything. Had to take early retirement. Healthcare takes up a lot of what I am taking home. I don’t know what to do? IF I find a non-profit I can do from home full-time, would that help in Parent Plus loans???? I’m baffled along with thousands of other parents in this same situation. I don’t know where to even BEGIN….AND can the Nat’l Collegiate Student Loan Trust bring me to court?

Meanne

Answer:

Dear Meanne,

Well on the federal student loans the simplest approach would be to consolidate the Parent PLUS loans into a new Direct Loan and opt for the Income Contingent Repayment option. This will give you the lowest, or now payment required, based on your income and expenses. This will never repay the loans but it will keep you out of default and avoid 19% in additional fees that can be added to what you owe for collection costs. You can find instructions and links on how to do this for free, here.

The National Collegiate Student Loan Trust (NCSLT) sound like they might have been private loans. NCSLT can certainly sue you but there might be two issues. First, if your income is strictly Social Security and benefits then if they sued you and won they may not be able to garnish your wages or income.

Second, there are real issues with the ability for lenders with NCSLT loans to be able to prove they have the standing to actually own the loan. This is something that can e challenged in court. I would suggest looking at these past NCSLT articles for more on this.


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