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.

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

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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.

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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.

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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.

Damon Day - Pro Debt Coach

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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.
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