“Dear Steve,
I am 26 and a single mom living with my parents. Im not receiving child support but might be soon. I graduated from college but not before a huge mix up had me owing my school 5000 dollars. This money was due a year ago and I’ve been trying to make small payments when I can but its only added up to a little over a hundred dollars and the school added about 70 dollars more every month.
They said I couldn’t work out a payment plan and they plan to turn me in to a collector soon. I have two school loans that I’ve gotten deferred but the third was a private loan from Sallie Mae that im having all kinds of trouble with. I make about a thousand a month due to taking care of my son full time. I have two credit cards pretty much maxed out to limit of 1000, a car loan, phone bill, insurance, and a furniture loan. My bills (not counting the school money or Sallie Mae) and groceries are just below what I make. Im trying to pull my self out of the whole I dug a few years ago but with a baby it isn’t easy.
My question to you is what do you think is my best option?
I talked to ClearPoint and they think they can reduce payments by 200 a month which seems pretty nice. Of course they can’t do anything about the school loans. Is this my best option or should I look into debt consolidation or bankruptcy? Im pretty bad off credit wise and don’t want to make the wrong choice.
What is my best option?
Teri”
Dear Teri,
Well, wow. I am a bit surprised ClearPoint is suggesting a solution that does not prioritize the student loan debts. Private student loan debt is the worst of all debt to owe. There are few options and they can easily garnish your pay if you live in a state that permits garnishment.
Based on what you’ve share it sounds like you need to clear the decks of all your dischargeable debt and make room to start tackling that student loan debt pronto. Trust me, nothing good comes from deferring or postponing dealing with the student loan debt.
You can click here to find a local bankruptcy attorney and talk to them for free about what bankruptcy would mean for you.
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Unfortunately, student loan servicers do not participate in credit counseling debt management programs (DMP). That is not to say that ClearPoint would not recommend you prioritize that debt by contacting the loan servicer directly and making a plan to get and keep that loan current at terms that are hopefully affordable for you. If choosing bankruptcy, it is correct that most student loans cannot be included.
Thomas Nitzsche
Media Relations Coordinator
ClearPoint Credit Counseling Solutions
http://www.clearpointccs.org
877-877-1995