We Owe $700,000 in Student Loans And Need Help! – Laura

“Dear Steve,

We are considering bankruptcy and have a huge student loan of over $700,000 that has been in forbearance for 24 months. We have only paid small monthly payments in the past because of being self-employed and not making a lot of money. The original amount was about $200,000 and the rest is interest. My husband is 51 & I am 56; we have 2 school aged children. Most of the other debt we would file is credit card debt.

Do you know of any cases where the loan is such an astronomical amount that would eventually have a payment higher than a person’s monthly income and was discharged in bankruptcy because of hardship?


broken piggybank with dollar notes

Dear Laura,

That damn forbearance trap. It only adds to the balance and never reduces the debt.

In order to discharge your student loans in bankruptcy people typically have the following three characteristics.

  1. Less likely to be employed.
  2. More likely to have a medical hardship.
  3. More likely to have lower annual incomes the year before they filed for bankruptcy.

For more information, see How to Really Discharge Your Student Loans in Bankruptcy.

Hopefully your student loans are federal loans or government backed. If so then you have some really good options for dealing with them. See The Ultimate Guide to Dealing With Student Loans You Can’t Afford.

Outside of that, if the loans finally go into a wage garnishment stage, at least there are state limits on how much can be garnished.

Bankruptcy at least would clear the decks of your other debt and give you a chance to make payments.

You can click here to find a local bankruptcy attorney and talk to them for free about your specific situation. Get the facts and then you can make an informed and educated decision if bankruptcy is right for you.

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.
Damon Day - Pro Debt Coach

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