Ask The Get Out of Debt Experts Student Loans

I Can’t File Bankruptcy and My Student Loans Are Killing Me. – Roxanne

“Dear Steve,

I have over 200,000 in federal guaranteed student loans. I live in Bensalem, PA. I make about 1500.00 take home every two weeks. I own a house and owe about 70,000 on it. The house is located in a working class neighborhood. it is cheaper to own then rent so I have not sold the house. I could sell the house for 130,000 and after paying off current mortgage and fees etc. I would have about 50,000 to put on the student loan. That would leave me with over a 150,000 in student loans and I would have to look for a place to rent.

I owe about 2500.00 on credit debt. Over half the loan is interest that has accumulated over the years. I search everyday for a better paying job but seem to have no luck. being promoted where I work is based on who you know not what you know. The IRB payment is currently 685 for 20 years. I haven;t had a raise for five years. i am at the end of my rope and not sure what to do. I don’t like working where I work. IT was once a good place to work but now because the managment all are friends and family if one person doesn’t like you they all treat you differently.

Anyway, I am 50 years old and will be paying until I am 70 provided I don’t get sick or any unforseen circumstances come my way. I realize now what a mistake I made. My saying is ” I thought I picked up a gardner snake but later realized I picked up a rattle snake”. So now I am weary and just feel broken. I have heard more than once that I took out the loan so I should pay it back and the most common one is that ” tax payers shouldn’t bail me out for a mistake I made”.

I have been working since I was 12 years old. I had a paper route and when I was 14 I was paid to help out at a mom and pop store, at 16 years I got my first real paying job. But now it seems like more and more I am being punished for working. I feel like how a mortgage is underwater.. I feel the same way about my financial situation in that my student loan is underwater and I am drowning. Unfortuantly I can’t declare bankruptcy not even chapter 13 —- chapter 13 would be an option I could go for as I feel the judge would set a 5 year repayment plan I could afford—-and no lawyer will take on the student loan to try and justify a hardship in a bankruptcy hearing. I also take anti-depressant and sleeping medication. I am tired 🙁

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Is there any class action lawsuites in regards to federal student loans to allow for bankruptcy or somekind of reogranization? Do you have any suggestions?

Thank you


Dear Roxanne,

I have some questions for you first.

  1. How much do you make a year?
  2. Why can’t you file bankruptcy. Have you filed in the past?
  3. Can you confirm your credit card debt is $2,500 and not $25,000.
  4. Did you consolidate your loans first into a Direct Loan before enrolling in the IRB plan?

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


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.


  • Have you thought about getting a roommate?  You own your home, why not make money from it?  They could pay you enough every month to make the payment on some of your student loans – if not the whole payment.

    Yea, it is a hassle, but it is a hassle that makes money.  Just think of that every time the roommate leaves dirty laundry on the floor.

    Dump Cable TV and the cell phone – that’s $200 a month right there.   Start looking at your lifestyle for more cuts and changes.

    You are clearing $3,000 a month after taxes, that should be more than enough to get  by, even with a $685 a month student loan.

    I live on less than you do, and manage to get by.  But I am aggressive about cutting unnecessary expenses.

    Good Luck!

  • are you in income based repayment, or income contingent? i put your info into the income based repayment calculator, and it comes out to $540 a month, and that is assuming you are single with no dependants

    i am assuming you have been paying for a few years already? the maximum repayment period is 25 years, after which time the remaining balance will be forgiven. 

    typically, when your loan is forgiven, the forgiven amount counts as income and is taxable. it  would be much easier to prove hardship if you waited until about 6 months before it is due to be forgiven, and argue that the tax burden of the forgiveness would pose a hardship…

    •  Thanks Laura,

      I am in the IRB but I need to look at the bill as I don’t even look at it anymore they just take money out of my bank account each month. I have been paying for five years. Twenty more years to go and I will be 70. 540.00 a month for 20 years is still a lot. What do you mean prove tax burden hardship before it is due?  Who do I ask that from? IRS? Department of Ed? So when I am 68.5 I should request hardship tax forgiveness?  I didn’t know I could do this. If I can make it to 68.5 without defaulting that will be good advice…sigh

      • it is only possible to discharge a student loan debt through bankrupcy if you can prove that continuing to have liability for the loan would constitute an undue hardship. this is very difficult to do, and would likely be impossible for you to do so while you are still employed and have assets.

        the maximum repayment period under the IBR plan is 25 years, if there is still a balance remaining at that time it is forgiven, and the department of education issues a 1099-c for forgiven debt. you would then have to pay taxes on the amount of debt that was forgiven.

        when you come close to the end of your repayment period, it is likely that you will still have quite a large balance.

        in your case, you will likely be retired by this time, and the tax liability would cause you hardship, so i think you would probably find that you would be able to get this loan discharged through bankrupcy just before the end of the repayment period. that wont help you much now, but it is something to keep in mind for the future.

        as for right now… perhaps you can work on lowering your adjusted gross income, which would in turn lower your payment amount.

        are you taking the deductions for paying student loan interest? you can deduct up to $2500 from your AGI.

        are you contributing to a 401k? do you have a health savings plan? contributions to each of these will lower your AGI.

        if you can get your AGI down to $50,000 your payment will drop to $415. The types of deductions i mentioned, reduce your tax liability, so in all liklihood, they wont reduce your take home pay by much, if at all.

        also, if you find your are having a tough month or two, you can call direct loans and ask for the loan to be put into forbearance for a month or two. your repayment period will be extended by the length of time you were in forbearance, but it can be a real godsend sometimes.

        best of luck to you, i hope things get better for you soon.

  • Hi Steve,

    Thank you for the follow up!

    I posted the answers to your questions after the question.

    How much do you make a year?  60,000 grossWhy can’t you file bankruptcy. Have you filed in the past? I filed chapter seven 7 years ago. The lawyer said it was too difficult to prove hardship and it seems that most lawyers believe that way. Can you confirm your credit card debt is $2,500 and not $25,000. My credit debt is 2,500 not much. I have been good at keeping it low. Did you consolidate your loans first into a Direct Loan before enrolling in the IRB plan? Yes they are in a direct loan.
    Thanks again,


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