My situation is this, I trained to become a Professional Pilot at a school that offered only ratings and not a degree.
To do this I used the Key Alternative Loan, a private student loan through Keybank. It took 30sec online and I suddenly had 40,000.00 in funding sent to the school.
I was quoted 6mo to finish training but that turned into 14. During which time I didn’t have a job thinking that the next month would be my last. To pay for my expenditures the school allowed me to add small amounts to the loan by submitting a request through them.
Needless to say the loan grew to 66000.00. When I finished training I began working at the school as a flight instructor. My salary was 1000.00 a month, the loan payment was 600.00. I wasn’t able to afford payments and over the course of a year or so I used up my economic hardship deferrals. A little more time went by and I would pay what I could afford but eventually the 7 individual loans went default.
I consulted a credit counselor and a lawyer in the state of Iowa and both recommended bankruptcy as my only recourse. I was in the process of moving to Alaska in search of flying jobs so I waited to pursue that course until I arrived. Once in Alaska I visited another credit counselor and received the same advice. So, I found a lawyer all too happy to file for me.
During the bankruptcy proceedings Keybank sent a letter saying they would pursue the loans even if the bankruptcy went through because they were student loans. At that point I asked to stop the bankruptcy proceedings and by not completing my post debtor education the case was dismissed.
At this point I have 7 default student loans and bankruptcy on my credit. I have actually received advice from a lawyer that moving out of country was one of my better options.
I currently pay the minimum on the loans to prevent them from being sold off to collection agencies. 290 dollars a month. At which rate the loans will stay on my credit until I’m well into my 50’s. The bankruptcy is reported on my annual credit report to stay for 10yrs.
So all in all I am suffering from the negative effects of a high debt to income ratio and a bankruptcy without the relief it is supposed to provide.
I feel helpless and financially dead. I’m currently unemployed and am having trouble finding another flying job, I would like to go back to school and retrain but of course financial aid is out of the question. And the payments make it difficult to pay for school out of pocket.
Any help or advice would be very much appreciated.
Thanks for your time
You really are between a rock and a hard place with the student loan issue. You may not be able to explore options until you have a stable income and can develop a plan.
Have you contacted Key Bank and learned whether they participate in any income based repayment plans like are available with gov backed student loans? While private lenders are not required to offer IBR plans, some do.
Some private student loans can be negotiated to reduced pay offs down the line when your finances stabilize giving you the ability to put a plan together.
Unfortunately, student loan debt can prove to be a heavier anchor than IRS debts.
Michael Bovee has worked with financially challenged consumers for the past 17 years and is a recognized expert in his field. Michael founded Consumer Recovery Network (CRN) in 2006. CRN offers debt settlement services and educational resources nationwide. He has served as its president since 2006.
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