Quick Answer: Student loan debt relief options are extremely limited since federal and private student loans generally cannot be discharged in bankruptcy, even during financial hardship. The borrower faces a $27,000 Sallie Mae loan that increased from $20,000 due to interest and penalties, with payments jumping from $165 to $269 monthly, leaving few options beyond income-driven repayment plans or potential disability discharge if the wife’s condition qualifies.
Question:
Dear Steve,
My wife took out an original student loan for $20,000 in 2007 and I cosigned. Then the bottom fell out during economic crisis at the time and we were forced to file chap 7 BK in 2009/2010 when my income was nearly cut in half.
Every weekday I read the enforcement actions, filings and fine print the outlets skip, and turn them into the one or two moves that actually improve your position — a rate worth moving for, a fee you can refuse, a deadline to beat before it costs you.
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Next, my wife went through major surgery and was disabled for several years. By the time Sallie Mae caught up with me as we couldn’t communicate during the BK period, not to mention that was the last thing I was thinking about, the loan had increase to $27,000 with interest and penalty.
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I settled out this finally with a $165/month payment which was represented as a full time payment for 20 years or so. I could handle that barely but what I could not handle was the overnight increase in payment of $100/month up to $269/month plus the $7000 in penalty plus all the other student loans I cosigned for and still trying to pay for.
We have no health insurance, no savings and no assets. My wife never got her degree and is so weak today she cant do much with it anyway. Plus they are now hitting my credit with derogatory because I cannot make the higher payment.
God forbid I should need a car for business as I drive a lot to make a living and cannot get one due to yet one more negative credit hit. Is there any relief for this white Anglo under these distressed situations? Appears not.
I was told by my attorney that I could not discharge in BK. I owe everyone in the world money from the BK period and this is too much. Furthermore the online school my wife gave all this money to, I believe are fraudulent. How do I even begin to address that?
How do I get out of this insanity? Thanks so much for any advice.
God bless,
Aaron
Answer:
Dear Aaron,
I can’t believe you actually say, “Is there any relief for this white Anglo under these distressed situations?” Wow, that really hit a nerve with me.
To begin with, in the grand scheme of things I’m a nobody, just a white guy with expertise in consumer debt issues. So what follows are just my thoughts and opinions, you can take them with a grain of salt if you want.
So here goes. Buckle up.
Who the fuck cares if you are white? I don’t give a shit if you are green, purple, or pink. I help everyone regardless of race, religion, or sexual orientation. And I will help you as well because you are someone in trouble. Not because you are a “white Anglo.”
Debtor’s Lives Matter
Financial problems and income hurdles are not exclusively race specific but minorities face more hurdles than white people. Because you are white does not mean you are afforded any special or additional options either from a debt relief company or under the law of consumer bankruptcy.
There is not a damn thing that makes your debt any more special because of your race and like everyone else, you are entitled to nothing in life. As I said in my book, “The only thing you are entitled to in life is…let’s see…nothing.”
But you can take action to deal with the situation. You are not entitled to help, but help is available for all people and not because you are a white Anglo.
You want some cold hard reality, how about the fact that looking forward, you should expect less financial opportunity as crazy ass politicians close borders and limit international trade. Just ask the Chamber of Commerce or any one of a number of economists, or say the International Monetary Fund Managing Director.
“A new analysis concludes Donald Trump’s economic proposals, taken at face value, could produce a prolonged recession and heavy job losses that would fall hardest on low- and middle-income workers.” – Source
And this bullshit thinking people have about America is the only country suffering from less opportunity is so narrow minded and just flat out ignorant.
The things that have struck you are situations that we could have easily solved as a country, decades ago. Private student loans could have been manageable or a lot less like a financial hangman noose. But banking lobbyists have a tremendous amount of power and fight reform.
And let’s take your drowning in medical debt. The medical system in America is utterly broken. Having run medical practices myself and lived in Europe and used nationalized health care, I can completely assure you that a safety net of a government run health service would be lightyears ahead of what is available in America.
If you want to make America great then I would quickly get behind student loan reform and medical insurance reform. Otherwise, you and everyone else who is going to fall into the declining income and opportunity bucket is going to experience a lot more of the misfortune you have had. Your children should except less as well.
The middle class in America is going to shrink and we could change things by raising taxes on the wealthy or adjusting tax rates as Warren Buffet and other 1% people suggest. Bonus reading and more.
Debt without degrees and unexpected illness will KILL the financial future of many. And lobbyists and politicians have put the Constitutional right of people to get a fresh start under the law through bankruptcy for student loans, behind big walls. And guess what, those Congress people and lobbyists are primarily white Anglos. So enjoy what your white Anglos gave you.
When it comes to your student loans, you didn’t say if they were federal or private so I can’t give you any specific advice. However, if these are federal loans you have a lot more options and if the school was fraudulent then you can look at a Borrower Defense claim to forgive the debt. If this is private student loan debt you will need an attorney to press for a discharge of the debt in your bankruptcy because it might not be protected. See this.
But remember this moving forward, when you co-sign for a debt you accept 100 percent of the liability for the debt if the borrower does not pay. Don’t do that again.
It sounds to me like you could benefit from another bankruptcy filing to get some legal protection and breathing room. I would suggest you talk to a bankruptcy attorney who is licensed in your state and talk about Chapter 13 protection since it is too soon to file for a Chapter 7. And if you have not done it yet, go to Benefits.gov and find out what public benefits, including Medicaid, you may be eligible for.
Whew, all that being said, you can always come back and ask for more help but don’t you ever pull that entitled “white Anglo” shit with me again. All debtor lives matter to me.
Dealing With Debt? Understanding your options is the first step. See how all your debt relief options compare — including ones most sites won’t tell you about. The Find Your Path quiz gives a recommendation based on your actual numbers, and the Scam-O-Meter checks any company’s complaint history before you sign. Federal Reserve research shows bankruptcy filers recover faster than those who don’t file.
Well there. Let’s get the facts straight. “The Bankruptcy Reform Act of 2005 straight-out exempted private loans from bankruptcy and from the normal business risk of loan default. Lenders could levy whatever terms they wanted on student and parent borrowers, and threaten them with permanent servitude if they couldn’t pay.” And who signed the law, George Bush.
I was actually playing a role in fighting the legislation and it was not signed during the Clinton administration after years of lobbying. It took till Clinton left office that Bush passed the reform act that placed significant hardships on people with private student loans.
It was the Higher Education Act of 1998 [as signed by former President Bill Clinton] that set the ball in motion, and caused significant and long-lasting harm to both past and current students (and to the system of higher education, as a whole), though. That simply cannot be denied — and any attempt to try to deny it would have to be based solely upon political bias and opinion, rather than truth and a genuine desire for transparency and honesty.
Moreover, you neglected to mention the following, in your response:
“Mrs. Clinton took a strong interest in the fate of the bankruptcy legislation, and President Bill Clinton vetoed it in late 2000. But its supporters pressed on, and in 2001, as a senator from New York, Mrs. Clinton was among 83 senators WHO VOTED IN FAVOR OF overhauling the bankruptcy system, a group that included 36 Democrats.
…
Ms. Warren later cited Mrs. Clinton’s campaign fund-raising from the banking industry as a factor in her vote.”
[Emphasis added]
From: http://www.nytimes.com/2016/02/07/us/politics/the-vote-for-bankruptcy-reform-that-haunts-hillary-clinton.html
Furthermore, Senator Hillary Clinton chose NOT to vote with regard to “The Bankruptcy Reform Act of 2005”, thereby directly aiding in its passage.
[Her stated reason(s) for not voting were of a highly questionable nature, and, as such, many citizens and political leaders had a legitimate reason to believe that her close ties to the banking industry led to her final decision. In other words, had she voted against it, she would be betraying her close associates and donors in the banking industry.]
Since you were playing a role in fighting this legislation, I’m certain that you must be aware of all of that…yet, for some reason, you made the choice to totally omit any mention of her personal role in the matter.
Why?
Was it a sincere omission, based upon a momentarily lapse in memory, perhaps — or are you deliberately attempting to “cover-up” Hillary Clinton’s involvement in the legislation, as a means of promoting your preferred candidate and manipulating the political opinion(s) of your readers?
That’s a very sincere question. I think your readers (people like me) deserve to know whether your advice and recommendations are 100% truthful and unbiased, or whether they are tainted by your personal political inclinations.
(I’m honestly not trying to be argumentative or hostile; I’m just sincerely perplexed by your defense of the Clintons, with regard to this subject. The statements and opinions that you have been expressing, here, simply do not appear to reflect or support the best interests of your audience in relation to matters of debt and the predatory nature of the financial/banking industries.)
On a side note, Hillary Clinton’s inappropriately close relationship with Wall Street likewise cannot be denied — though I did notice that you did not attempt to do so, in your comment (very likely because it is thoroughly indefensible, on all levels).
So, in conclusion…Was former President George W. Bush involved in corrupt activities and legislation, during his presidency? Absolutely. Does that somehow excuse Hillary [and former President Bill] Clinton’s repeated involvement in corrupt activities and legislation, throughout all of her years as a political figure — or her direct role in causing harm to American borrowers? No, of course not.
If you want to make your comments an anti-Hillary rant that’s your choice. But the fact is private student loan restrictions were not signed in by President Bush and the Bush administration fought them. HEA 98 did make changed but what changes are you citing regarding private student loans? http://www2.ed.gov/policy/highered/leg/hea98/index.html?exp=3
A federal loan will default after 270 days past due. However federal loans have a rehabilitation process to stop the negative reporting history and bring the loans current. If rehabilitation is entered within 60 days of default it will eliminate collection fees.
Private loans are just private loans like nearly any other. No special options unless the lender wants to offer some. I have seen some private loans playing with perplexing forbearance, but I’ve not seen the same thing with federal loans.
If you have any issues surrounding federal loans you can file a complaint with the CFPB or ask for help from the Department of Education Ombudsman. If you are having an issue with a private lender you can file a complaint with the CFPB or hire an experienced attorney who is licensed in your state to assist you.
If your issue is with private loans and verifying ownership, then a debt validation process is available. Many of the private loans have issues when attempting to validate the loans and some private loans have issues that do not give them protection in bankruptcy.
Are their big problems with student loans, yes. But it is a complicated issue that involves many parties, including the individuals that agreed to take out the loans. Luckily, when it comes to fraud regarding federal loans the evolving Borrower Defense strategy will prove to be helpful.
The government has some fantastic programs to deal with student loan debt that can forgive the entire balance, no matter what your race is. Look at Public Service Loan Forgiveness, the new Borrower Defense Program, or on of the disabled programs. The “free market” offers no such solutions.
Why have you suffered 10 years of bad credit? Anyone who actively rebuilds their credit after bankruptcy is back being credit eligible and with really decent credit scores after 12-18 months? See https://getoutofdebt.org/32410/how-to-easily-rebuild-your-credit-and-have-good-credit-again
You are wrong about data. There is plenty but the problem is many people just don’t try. Look at https://getoutofdebt.org/48336/how-to-really-discharge-your-student-loans-in-bankruptcy and https://getoutofdebt.org/53098/federal-student-loans-discharged-in-bankruptcy-surprising-2012-data-cases and https://getoutofdebt.org/category/debt-articles/student-loan-related/student-loan-bankruptcy-discharge
I get his point, though. There has been very little help for white anglo be it scholarships, debt relief etc. I never got one damn thing from college by the way of scholarships and my peers were receiving full rides because they had a different color skin or because they were women. Heck even those that could prove they were 1/100 native American were receiving help.
Steve, whether you want to face it or not, white anglo men are NOT privileged! Sounds like maybe you have been living in a bubble for the past twenty years.
Federal income driven loan repayment programs and bankruptcy are not race dependent. When it comes to scholarships, this study shows 65.2% of scholarships are given to white students. http://www.finaid.org/scholarships/20110902racescholarships.pdf
The point of my response is that debt is not a race issue and debt relief does not have a racial bias. Debt plays no role in debt relief. And when it comes to the systemic problems of higher education cost and the long problem of medical debt, that is a problem created by laws that everyone can solve.
Gee, Steve, tell us what you REALLY think. 🙂 But you probably figured correctly where he was coming from with that odd comment. And you still gave him good advice! (Although I’d guess his wife must be on Medicaid already?)
I would hope she was. But then again I’ve actually had people say to me that Medicaid is only for black people and in this case I sure didn’t want to assume the reader felt differently.
Steve, I like you, but seriously, you are acting like a liberal. People say lots of things, that doesn’t mean this person felt the same. White people, males especially, do not have privilege. We are all equally poor now, and we are equally shot at by our federalized police.
So while you may not care about what color the person is, lots of others do. The fact remains that there is nothing out there to help out white people, especially males; that is, when comparing/contrasting to all the help out there for the minorities and women. The theory of this result was based on white male privilege but, as you can clearly see by how devastated we all are, white privilege was a lie except for a few like maybe you. As for the rest of us, we dont have any carrying capacity left so when we fall, you fall.
As for me, I aint got nothing now because I went to a liberal college and gained a liberal degree; it would have been better for me to go to trade school, or maybe even join the KKK for some fracking scholarship money!
Another trait of liberals is that they moderate their own blogs or comment sections, and allow only those comments that they agree with. You have helped me over the years, so let me help you. Get someone else to mod your site; you dont have to control the free speech of others in order to win.
I would urge you to go to infowars dot com to experience free speech; its really one of the last places you can say whats on your mind without control freak mods and censorship. Try it, Steve, and you will be better for it; I promise.
Mr. Rhode, I have tremendous respect for you, and I read your posts regularly, but I think that you completely misunderstood Aaron’s query (or choice of phrasing). My family and I are actually in a nearly identical situation as Aaron and his wife are and, for the past decade, we have repeatedly been told by a number of agencies and advocacy groups that no one could – or would – assist us simply because we happen to be Caucasian. You said, “Who the fuck cares if you are white?” Believe it or not, many, MANY organizations do, and I’m quite shocked that you don’t seem to be aware of this fact. Also, I think that Aaron deserved a little more empathy and understanding, considering his situation and all that he and his wife have been through.
Until you’ve been in a situation where you and your family were desperate, broke (financially, physically, and mentally, from all of the stress) and in need of relief…but that relief was denied to you only because of your ethnicity…you have no idea how painful and frustrating such a situation can be.
Perhaps hearing such stories from others might open your eyes and soften your heart, though.
Neither bankruptcy courts or debt relief agencies care what your race is. Being white entitles you to no debt relief from medical bills or school loans, nor does any other race. If you have not checked, visit Benefits.gov to see what programs you are eligible for. Also, please feel free to post a specific example of a debt relief program you were turned down for because you were white and I’ll be happy to research it.
Truth Reporter and Steve,
All I am asking for is to not be charged 10% interest and not be several thousand dollars for not being able to pay this $20K loan back. Is it a student loan supposed to help people? Isn’t it sponsored by the government even though this one is private? Been treated as if I am a bad credit risk and from the book is if I just didn’t pay my debt because I didn’t want to. Anyone have a magic trick up your sleeve to work with these Navient (Sallie Mae) people?
Thanks,
Aaron
Not unless you either want to default and risk getting sued in order to settle the debt or pursue bankruptcy and see if this is one of those private loans that might be able to be discharged. A private student loan is just a regular loan with restrictions in bankruptcy thanks to banking lobbyists.
White anglos don’t get to benefit from Affirmative Action, govt. contract set-asides, hiring quotas, and a series of other government programs. The author was almost undoubtedly asking if there is any program out there that CAN help him, despite his being a White Anglo. Did you nevertheless bash him to try and boost your cred. with so-called minorities?
Totally agree; I mean I like Steve and read him every day, but boy didnt his liberal flag come out on this one! Sometimes you just have to slap the liberal out of them, lol.