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Should I Stop Paying My Private Student Loans or File Bankruptcy?

By on June 16, 2016


Dear Steve,

I have about $64,000 in private student loan debt. They are consolidated into one loan with repayment of $500.91 a month for 20 years. After graduating college with a bachelor’s (started to do master’s then realized how much debt I accumulated) I got work on the lower end of the spectrum in my field.

After the oilfield decline, I was laid off for months. I had bills to pay, I used my credit card, used high interest loans to be able to live.

I got a new job (not in my field, but still in the oil field). I bought a house because I now have a newborn child. So on top of living expenses for me and my family, child care and trying to pay off on debt I am left scraping during the month to try and save something for emergencies, but I’m just ending up paycheck to paycheck.

Should I try to file for bankruptcy or would it be simpler to default and then face it head on?



Dear Chad,

I wish there was an easy answer for your situation. There is not. The ability to discharge student loan debt is both a fight and a technical war a bankruptcy attorney would most likely have to fight for you. But I would urge you to read These Private Student Loans Can Be Easily Discharged in Bankruptcy.

As far as defaulting on your student loan payments, again, that’s another strategy that is dictated more by circumstance than a best case solution. For that issue I would invite you to read Top 10 Reasons You Should Stop Paying Your Unaffordable Private Student Loan.

Either strategy has it’s unique challenges. If you pursue the bankruptcy route you will need to first make sure you have found a bankruptcy attorney with experience in this area and who is willing to take this on. If you pursue the default approach you need to be prepared for the possibility of being sued over the debt.

READ  I'm a Social Worker Trying to Deal With Student Loans

Here is what I do know for certain, if you don’t make some adjustment about the debt, increase your income, or reduce your expenses then we already know what the future will look like. You will be without a safety emergency fund and living paycheck-to-paycheck, hoping the oil market doesn’t swing down again.

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About 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.


  1. jj grey

    June 21, 2016 at 10:53 am

    I have been in exactly Chads shoes.
    I choose default – My tax returns are all gone, and my paycheck is under threat of garnishment. BUT I have a small emergency fund, and lien free (no mortgage or loans on it) camper and piece of land to park it on.
    Should the worst come to worst and my latest job disappear I will be living on the land in a camper with my family while preparing to file bankruptcy as soon as the unemployment runs out.
    Shelter, heat, food, clothing, medicine (and education for a child) are the essentials.
    Pay for these first, figure out how to get them for less.
    Basic communication (a phone per adult maximum with minimum cost) and Transportation (foot and bike wherever possible) are also allowable.
    Expect to declare bankruptcy. Expect to have to do it yourself (Pro Se I believe it is called). Plan it, plan your adversarial proceedings, there is research here and in other websites to help.
    You might be able to scrape by and maybe even finish paying it off, but don’t let those first essentials go wanting for you or your family due to your debt slavery. (And it is debt slavery, when you look at how the system has been rigged). You owe your family more than you owe some faceless soulless corporation that has rigged the legal game against you.

    • Blen Butterson

      June 21, 2016 at 6:53 pm

      A private lender would not be able to take your tax returns – sounds like those could be federal loans.

      • jj grey

        June 22, 2016 at 5:06 pm

        Got both actually. I could almost afford the private ones, but not the federal as well.

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