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Student Loans and Suicide. I’m a Lawyer Living in a Hovel in New York With Private Student Loan Debt and Thinking of Becoming an Escort.

“Dear Steve,

I have defaulted on $90,000 in student loans. The remainder of my loans (I believe they are now somewhere around $100,000) are in forbearance. Last year I made a total of about $40,000, first as a temporary administrative assistant and then as a full-time employee of a corporation. Unable to find a job, I attempted to start my own law practice, which was almost as much of a waste of time and money as getting a law degree. I foresaw disaster in 2008 when some of my loans went into repayment. I called my lender, Citibank, several times to see if we could work out a payment plan that I could stick to but was told multiple times that my only option was default. By 2009 I had used all the deferment and forbearance time for certain loans.

I now take home $3600 a month as a legislative analyst. I live in a hovel in New York, paying $1,200 a month for rent and, in the winter, more than $200 a month for gas and electricity. I cannot find a landlord who will rent to me given my credit score (which says nothing about my history of paying rent on time–fortunately, I have had no problems paying rent yet). I would like to move to a cheaper apartment, but I’m afraid that won’t be possible with my credit score. If I move back in with my parents, I will have to quit my job. My parents live in a small town in Texas. I’m not sure what my job prospects would be there.

According to Citibank, my defaulted loans have been sold, but according to the collections agency, DCS, they have not. I really don’t know their status, other than that they are in default. I know that I cannot get a pay raise at my job because salaries have been frozen for three years, so I am currently applying for higher paying jobs and hoping that the hiring companies don’t require a credit check. I have looked into escort services as a way to make money on the side but am terrified of being raped or getting an STD and frankly don’t think there is much of a market for someone who looks like me.

I guess my question is whether I should try anything else before committing suicide. I understand that nothing is free, including “education,” but I feel that now I am being disproportionately punished for my crime of stupidity (the crime of thinking that I could go to law school, become a lawyer, and make enough money to pay for law school and lead a better life than my parents have led). I am completely miserable and see no hope whatsoever, especially in light of the fact that people who owe less than a quarter of what I owe are contemplating suicide.

See also  Bankruptcy Law and Student Loans

I would greatly appreciate a response, even if it is just to confirm that there is no hope.

Thank you.”

Okay, thank you for reaching out to me for help. The first thing we need to do is regroup and take a few really deep breaths.

I can certainly hear your pain and frustration that is running through your life at the moment. Thoughts of suicide, becoming an escort and other solutions to address the situation.

It appears to me that we have two issues here. The first is the underlying student loans. The second is the impact the loans are having on your life.

If I could wave a wand I’d want you to get your energy aligned to focus on overcoming the student loan problem. If you can take the life moments that you are otherwise spending on wild thoughts on how to deal with the debt and make it your mission to tackle the underlying situation, it will give you some focus and clarity.

Private student loans are among the worst financial trap in America. More is owed now for student loans than all credit card debt combined and for the most part student loans fall into two buckets.

Government backed student loans have some good options for dealing with them. Private student loans have fewer options.

Here are some things to explore.

  1. If any of your student loans are government backed then it might be possible to consolidate those loans into a government backed loan that has some good repayment alternatives like the Income Based Repayment Program (IBR).
  2. It is true that for the most part student loans cannot be discharged in bankruptcy but there is an exception.

    Under § 523(a)(8) of the Bankruptcy Code, student loans are nondischargeable unless repayment of the loan would impose an undue hardship on the debtor. The burden of establishing undue hardship, by a preponderance of the evidence, is on the debtor. The Code contains no definition of the phrase “undue hardship” and interpretation of the concept has been left to the courts. In this Circuit, the applicable standard is the “totality of the circumstances” test as set forth in Andrews. In applying this approach, the courts are to consider: (1) the debtor’s past, current and reasonably reliable future financial resources; (2) the reasonable necessary living expenses of the debtor and the debtor’s dependents; and (3) and any other relevant facts and circumstances unique to the particular case.

    The principal inquiry is to determine whether “the debtor’s reasonable future financial resources will sufficiently cover payment of the student loan debt – while still allowing for a minimal standard of living”; if so, the indebtedness should not be discharged. Bankruptcy courts are required to analyze a debtor’s student loans, and make a determination of nondischargeability of them, on a loan-by-loan basis. There is no authority in this Circuit for discharging only a portion of a particular loan. – Marie vs Citibank

Since you are in New York City I would suggest you contact Jay Fleischman, a bankruptcy attorney, and discuss your situation. It’s a long shot but it’s still worth exploring.

See also  Additional Criteria Used to Defend Discharge of Federal Student Loans in Bankruptcy

It might be that a move back to Texas would be beneficial in that it may support your claim the loans are simply unsustainable. And a move back would give you the opportunity to rest in a safe place for a bit and recharge for any fight ahead.

Allowing yourself to remain in a situation that only tears you down emotionally is not healthy or sustainable.

One crazy idea worth possibly exploring is to move back to Texas, mentally regroup, let the private student loans default, the lender may sue you but in Texas since these are private student loans they apepar to not be able to garnish your wages. Texas “do[es] not allow wage garnishment at all except for debts related to taxes, child support, federally guaranteed student loans, and court-ordered fines or restitution.” – Source. As time moved on you could later attempt to settle on the defaulted student loans if you had the financial capacity to do so.

I agree that is kind of a radical approach. You’d need to contact a Texas attorney and confirm that your wages could not be attached for the private student loans before you embarked on such a journey.

Texas and Pennsylvania, for example, do not allow wage garnishment for unsecured debts such as private student loans. – Source

Once you got your feet back on the ground in Texas you could explore new employment opportunities in Texas and breath some life back into your law career.

If you view the move back as a rescue mission, rather than a pitty move you can significantly use it to your advantage. If you move back with your tail between your legs and feeling hopeless it may not provide you with the resurrection you deserve.

We need to turn this situation into a success story.

Please post your responses and follow-up messages to me on this in the comments section below.

Sincerly,
Steve

You are not alone. I'm here to help. There is no need to suffer in silence. We can get through this. Tomorrow can be better than today. Don't give up.




About the author

Steve Rhode

Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.

43 Comments

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  • I feel your pain, and I have a much deeper debt hole than the one I am reading about. My private loans are at 149,000 dollars, and my federal loans are roughly 30,000. Since I could not possibly pay my private student loans with a catholic teacher’s salary, the state went after me and garnished 10% of my wages in back pay. Not to mention, I have a huge cloud following me day to day, my credit score is shot. I only have two small credit cards to show I am trying to somehow rehab my credit. I will never be able to buy a house, or start a family. I am in a situation where there is no help out there whatsoever UNLESS the Private Student Loan Bankruptcy Act falls into place this year after two years of no success. The only hope right now is the Student Fairness Act of 2013 that will go into affect in July – which seems to have some options with federal loans, and allowing the chance to shift private loans into federal loans, which in my case is a LONGSHOT. I had no guidance whatsoever when applying for these loans. I never completed any of the paperwork, I only signed them. My grandmother was the cosigner who passed away three years ago, and now the loan is solely thrown on me.
    The only real advice I can give you is to keep searching for answers, and keep fighting this. There has to be some kind of light at the end of the tunnel, and even though this is a debt that is out of reach – still try to find it in yourself to enjoy your life, even if you are in debt the rest of your life. Try to find a place to live with roommates and show them a track record of the rent you’ve paid in previous living situations to prove you pay living expenses on time. Save phone bills or utility bills to show you paid them on time and get a letter from previous landlords to state that you’ve been on time with payments.
    I always make sure my rent is my number 1 option. If you can build a good rapport with roommates, and shared living situations, some places may take that into consideration, and not really count your student loan credit score against you. Hang in there, and just know that other people are in the same boat as you. I’m living day to day, pay check to pay check, and barely get by. And that’s with only the 10% of my income going to the loans I cannot pay back.
    Something has to be done soon – or not only will our economy suffer more, but students who are fresh out of college will soon not be able to buy any houses, mortgages will soon be in a deeper decline than it already is, and only the ones who are lucky enough to land a decent job to repay may have a real shot at some kind of a life beyond college. I just wish I was smarter AND educated more on what I was getting myself into before I went to College. I almost regret backing out of joining the army after high school and having the military pay for my education. But it’s too late to turn back now. You have to do all you can to keep moving forward.

  •  I owe almost 200,000 on my federal direct student loan and pray every night and feels like every minute of every day that god will release me from this debt. But……. so here I sit readin this sad story and feeling the same way. God what was I thinking. My life needs a whole makeover. I don’t like my job can’t seem to get anywhere. Promotions are based on who you know and not what you know. Total debt with student loans is about 270,000 and I make 60,000 gross. It’s so weird it’s like waking up one day and realizing I have made a terrible terrible mistake. My saying goes like this, I though I picked up a gardner snake but didn’t realize I had picked up a rattle snake. I have thought about suicide but realize I am to wimpy to do it and probably would hurt people in the process. Actually, I couldn’t do that to my dog. I ask myself everyday why did I take these loans out. More than half is accumulated interest. so here I am sigh…….. Before the judgemental types come on here. I search everyday for a better paying job. Working part-time at a restaurant or department store is not going to help. I have tried room mates. One room mate died, the others were so flakey it ended up costing me more grief and money than it was worth. I have thought about living in a tent but that wouldn’t help with maintaining a job. I would have no where to clean and keep clothing. But I figure if I lived in a tent for 10 years and at out of a soup kitchen I could probably pay back the loans — but somehow I think I would lose my job and kill myself after the first year.  Please world pray for me that some good fortune comes around so I can be released from my debt and then help others to be released from the student loan burden.

    • I am 24 years old. I graduated 2 years ago. I owe $150,000. NJ Class private student loans. I don’t know what to do with myself at this point. I don’t see a way out. I spend my time stressing and researching options. There isn’t any options. 

      I have also contemplated suicide. A couple of months ago I came really close to it. Collection calls, no income, finding out my Father had an affair, my boyfriend breaking up with me……I went from weighing 120 lbs to 100 lbs.  I decided to go out with my friend to forget my problems at least for a little bit. Believe it or not I am not a frequent drinker if ever and I do not experiment with drugs. However, I got drunk out of my mind. I still cannot remember when or how I made the decision to take my car out for a ride (after I got home from my outing.) I remember crying hysterically while driving. It was 3 am, I ran a stop sign not caring. I was driving a Scion tC when an SUV crashed in between my driver’s door and back end. My car flipped at least 3 times and I am still alive. While the car was flipping all I could think about was my 17 year old Sister, my 7 year old Brother, my Mother and my dog. My Mother cosigned for my loans by the way. My exact thought while rolling in the car was “I change my mind. I cannot die. God don’t let me die….my Family.” Now, I have a  year left of license suspension. I have a temporary job paying $20 an hour. I have no idea how I am going to get to work every morning. I’ve tried making extra money selling things at fairs and applying for part time jobs.  Life sucks. The stress is eating me up every day.  I guess I am happy I survived the car accident though. Suicide is not an option.  I couldn’t leave my Family. They are the reason I stick around this insignificant life. 

      It just isn’t fair that we are treated as delinquents. Why doesn’t the government hear our cries?

      I hope for some light in your life. I hope this burden ends for us some day.

      • Another thing, I am thinking about getting life insurance. I recommend anyone who had their parents cosign to do so.

        $150,000 on student loans that I am trying to keep from falling into default. Oh, forgot to tell. I have defaulted on $25,000. $16,500 is the principal.  I haven’t been able to begin my payment plan on the defaulted loan. I am in process of settling my credit cards. I’m falling behind on my surcharges also because I am trying to keep the $150,000 from falling into default status.

        This just isn’t life.

        I know having a DUI is my fault.  I was emotional and drunk. Pretending to be strong for (my Family) such a long time until I lost my mind.  How can a person live with regular life issues, little income, and this kind of debt?

  • Undue hardships would only be granted if there is substantial proof that the debtor cannot overcome the hardship over the life of the loan. If it is a 100K loan, the time to pay off will be considered and the burden will be on the debtor to prove they cannot improve their situation. It rarely succeeds, and generally only in the case of disability that will continue. The bankruptcy protections which are afforded to every OTHER TYPE OF LOAN need to be returned to student loans. It is truly a very immoral and sick country that allows someone to rack up tens of thousands in gambling debt to walk away but education debt will follow you into the grave but before you get there it will take take from you disability, social security, tax returns, anything without a court order. Maybe wage garnishment can be avoided, but liens, etc. cannot.

    • There are way to fix the problem with private student loans.  Part of the problem is a lack of Lawyers with integrity, guts, and vision to figure it out.  The major problem is the biased judges shamelessly ruling in favor of student loan creditors.  Just read some of the court opinions and you will see.  The Brunner Test is complete ridiculousness, “certainty of hopelessness,” are you serious?  This judicial law making has got to stop.  There are a couple of holes in the statues.  There are not enough cases where people actually attacked the interpretation of statues of 11 USC § 523.  Everybody who takes on these cases only takes the path of least resistance which is arguing “undue hardship.”  There are plenty of other arguments to make, but it takes research, time and effort.  Many attorneys are not willing to put this kind of effort into a case, because of greed.  They want money, and someone at their wits end who doesn’t have the kind of money to fund a case with this level of work and research.  My suggestion to all the recent law graduates is to flood the courts with adversarial proceedings and civil suits against these lenders.  This in turn will open the eyes of Congress on the issue.  Although difficult, this is a new opportunity to make some money in a niche that has potential.  One Trillion in outstanding student loans and so many people who have them.  Use the dockets find related case, start the battle.  This student loan mess is a racket.  The cost of school has inflated so much its not even worth it to going to school and it all comes back to Lobbyist with interest in taking advantage of the American public.  When you get rid of the bankruptcy protections, tuitions inflate, and creditors have unlimited power.  Having peoples parents co-sign loans and ruining families when their children default.  Having clauses when in death the loan still exist so if their child dies they are still responsible for the loan.  People killing themselves, becoming homeless, and resorting to unscrupulous actives due to these “slave loans.”  Its complete evil and the people responsible for orchestrating this mess will one day face judgment for these actions.

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