“Dear Steve,
The past three years have been difficult for me; I was diagnosed with major depressive disorder after a depressive episode that made me unable to attend school or work. Subsequent attempts to return to school were unsuccessful, as were attempts to treat my illness– I would start a semester hopeful, but sooner or later my illness would catch up and I’d have passed the refund deadlines. I have thus paid for a handful of semesters of school — with private student loans, unfortunately– that I wasn’t even able to complete. Eventually I gave up trying school until I was more stable, but after I had been out of school for more than 6 months, the private lenders started coming after me. The only solution I had was to pay them each month for forbearance, the possibility of which I have now exhausted completely.Â
More than a year ago I got a job but lost it months later because my illness rendered me unable to show up. If I was ever eligible for unemployment/disability benefits, I never knew it; so I have not had any source of income at all, for all this time.Â
After receiving a few extra diagnoses (the possibility of which had been previously overlooked) I have become more able to handle my illness these days. I have recently gotten a part-time job but it is not enough to pay for my necessities *and* the loan repayments that the lender is now asking me for. Unfortunately I feel as though I have exhausted my friends’ resources as well– they have been the only thing helping me get by this entire time. I’m tired of being a burden on so many people for something I can’t even help. I never thought this would happen to me.Â
I am apparently closer to being reported to collections by my private loan lender than I’d prefer to be. Their calls are becoming more frequent and more aggressive, but I don’t know what else to tell them aside from “I can’t”– even their suggestions for a lower monthly repayment are too much for me to handle. My credit score is also probably a wreck by this time. I’m at a loss, completely.
Do I have any options, in my case? Are there any assistance programs I could apply for? Is there anything that someone in my situation could do to lessen this burden? What would you recommend?
Stasia”
Dear Stasia,
The good news is it appears your illness is under more control and you are getting better. It does not sound like you are permanently disabled but you should ask your student loan servicer about their programs for a disability discharge or their “compassionate review” process.
Bad credit from this or being reported to the credit bureaus is really a secondary concern. It’s not even near the top of my worry list. What is more important is getting you out from under the financial responsibility of friends and family if possible. I’m sure they’ve been emotionally supportive through your challenges but continuing to fund the student loans will take a toll on the relationship.
If you have not done so already I would suggest you visit Benefits.gov to find out what public assistance programs you might be eligible for. Every dollar in public benefits is a dollar more you can direct towards getting these loans back in shape.
Unfortunately your situation reads like the perfect storm. You enrolled in school only to not be able to complete the semester but after the withdrawal date which leaves you on the hook for the entire school fees without any of the benefit. I can certainly understand how the depression you faced led to this.
If the private student loan servicer has no internal programs that match your situation and you are unable to make the payments demanded, you do always have the option of filing a chapter 13 bankruptcy. It will allow you to pay what you can afford, stop collections, and block some fees and collection charges. It will not however discharge your debt. That will not be possible until Congress changes the bankruptcy law back to what it was before 2005 when private student loans could be discharged.
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.
The other advantage of removing the student loan collection pressure is it allows you to focus on your illness and getting better and stronger to face the world. That’s an important benefit that should not be overlooked.
Having this feeling of hopeless debt hanging over you simply amplifies the other emotions you are trying to get under control and adds on the possibility of being more anxious.
if we can eliminate that component of this issue it will give you a far greater chance of finding peace and moving forward with your life.
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.
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So sorry to hear about your situation with the student loan creditors. I have a couple of things to add to the comment above. I am an Ohio bankruptcy attorney. The judges in the Southern District, where Columbus is located, very rarely find “undue hardship”, which is the standard that you must establish in order to be able to discharge student loan debt in bankruptcy. I would certainly not waste your precious limited resources to litigate that issue.
Mr. Rhodes is correct about Chapter 13 bankruptcy. It will allow you to protect yourself with minimal payment for up to 5 years. At that point, hopefully you are in better shape and able to re-establish a relationship with those creditors. Since it is so very difficult to discharge student loans, we frequently use Chapter 13 as a method to stave off the student loan creditors.
However, you should also consider doing nothing. What I mean by that, is you could attempt to persuade the creditors to defer repayment since you are clearly financially unable to make payment. In the end though, they can’t really do anything to you other than call and send you letters. There is no such thing in this country as a debtors’ prison. They can’t garnish or seize your type of income. Once you realize that they can only call and write, then you may be one step closer to the much needed stress relief that will allow you to focus on getting well.
Either way, I’m glad that you have a good support group. If you have any Ohio-specific questions about bankruptcy, don’t hesitate to reach out to me.
Russ Cope