Get Out of Debt Guy - Steve Rhode

I Can’t Find a Bankruptcy Attorney to Help With My Student Loans

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Question:

Dear Steve,

I have a private student loan from AES that was taken out in 2004

Original Balance: $22,099.
Current Balance: $21,518.

Total Interest + Principle paid to date: $21,216.
(Total principle satisfied $8300, the rest is all interest), so how I still have nearly the same balance as I started with is baffling.

I do not see any light at the end of the tunnel for this loan.

My mother co-signed as I was unemployed at the time, however I honestly believe this loan was predatory in nature, as the school I attended was The Art Institute of San Diego (attended 2004) which appears to be more focused on enrolling students as main source of compensation.

Some interesting facts regarding The Art Institute:

“The Art Institutes parent company EDMC is investigated and sued by the United States Department of Justice for illegal recruitment practices and the fraudulent receipt of 11 billion of federal financial aid. The Department of Justice claimed The Art Institutes ‘created a ‘boiler room’ style sales culture and has made recruiting the sole focus of its compensation system.”

Currently my mother has been the only person trying to maintain payments to AES, as I have struggled to get a perm long term job over the past 8 years I have lived in Austin. She is elderly and suffering financially as well, but refuses to try and take action, so I want to learn how to file BK myself and go through adverse proceedings, if it’s reasonable based on the Brunner Test.

The bulk of my work has been through contract / temp agencies with no perm offers after completing assignments. This has been a very frustrating and disheartening experience. I do not have a 4 yr degree (nor a 2 yr degree)

I also have a 17-18k federal student loan debt which I started accruing since 1994 and have tried attending different community colleges over the years as a means to survive and not sure if there is a way to wipe this out to offer a real fresh start in life.

Any help would be greatly appreciated, as I feel stuck in life at the age of 43, unable to return to school as I simply cannot afford to try and take out further student loan debt, and equally scared of the future.

No lavish lifestyle for me ever, I have a 16 yr old truck that will most likely not last much longer, cannot afford a new car payment + increased insurance for full coverage, while trying to figure out how I would pay for basic living expenses on top of the payments for the student loans.

It’s a miserable feeling to feel like a failure. The Fed loans were taken out to help cover living costs and many times I had to leave school to deal with family drama.

I would love to get a 2nd chance, go back to school and obtain a degree or have the opportunity to obtain training in computer network admin which is in high demand.

Any feedback would be appreciated

Not sure how to go about filing the BK myself let alone dealing with adverse proceedings or the costs that might be involved. I have spoken to 5-6 attorneys locally and they immediately tell me student loans (private or federal) cannot be discharged and they aren’t even willing to help.

One law firm said they could file for me but it would cost $5-6k up front because of the adversary proceedings. I can’t even afford that!

What options / suggestions might you give?

Thank you for your time,

Mark

Answer:

Dear Mark,

First off, I know that these issues can make you feel like a failure. But feeling like a failure and being a failure are two different things. You should read this.

You said, “The Fed loans were taken out to help cover living costs and many times I had to leave school to deal with family drama.” Did you mean the private loans?

I’m not surprised you ran into a lot of rejection. This is a new and developing area and a lot of bankruptcy attorneys are not onboard yet. One place to look for help from an attorney who is more experienced in student loan issues is here.

There are some people that have taken on the task of filing their own bankruptcy and their own Adversary Proceeding. Some people are successful. Here is the story of one person who was successful.

I can point you to articles that contain advice that seems relevant. Look at this, this, and this. Here are a couple of other really good articles to read, Can You Discharge Private Student Loans in Bankruptcy? and A Look at Sallie Mae and Other Student Loans Discharged in Bankruptcy in 2012.

The big hurdle is to get you to a point where you would be competent to file your own bankruptcy proceeding. It’s not a process I generally recommend because as the U.S. Courts say, “Individuals can file bankruptcy without an attorney, which is called filing pro se. However, seeking the advice of a qualified attorney is strongly recommended because bankruptcy has long-term financial and legal outcomes.” – Source

But you can find all the bankruptcy forms you would need, here.

Another option to consider might be to do nothing, stop paying, and if your co-signer is without assets, just wait for collections. Read Top 10 Reasons You Should Stop Paying Your Unaffordable Private Student Loan.


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