Get Out of Debt Guy - Steve Rhode

I’ve Got Debt Problems All Over My Life. Please Help. – Judith

1-844-335-1967

Question:

Dear Steve,

Well I have a 3 fold question or problem I guess you could say. First one is regarding my daughter, Sarah. Sarah has over $60,000 in student loan debt. She graduated, top of her class with a Bachelors in Graphic Design, was out a year and could not find a job.

She was working at Starbucks! Now she is active duty Air Force, thinking it would help her student loan situation. It has not. She has both federal and private, with the private being the highest amounts. She is struggling to even survive at this point. Military is not like it used to be. She has to pay for her meals and uniforms and she has a car note. Now she is super depressed too. I am really worried about her.

Second, I have a student loan from 1987! That I thought my ex-husband paid, but he didn’t. They waited all this time to come after me so to speak. I got remarried and I guess that flagged something somehow? Even though I have been at the same job more than 20 years, I think it got sold a few times. Anyway, it was originally like $4000 now its $28000 and going up every day. I am trying to pay but there is no end in sight and they are threatening if you don’t pay etc.

Third, my husband and I are in so much debt! He took on way more than he bargained for when we got married and I feel so bad. We probably have over $500,000 in debt all together and most or at least half is credit cards. We are in way over our heads.

Can you help my daughter with her student loans?
Can you help me with my student loans?
Can you help me with my credit card debt?

Judith

Answer:

Dear Judith,

Well I’ve got some good news for you and have some links to direct you to solutions for each issue.

Since your daughter is not in the military she absolutely needs to get on track for Public Service Loan Forgiveness. Under this program she should consolidate her federal loans into a Direct Consolidation Loan and opt to repay it via an income driven repayment plan like the IBR. Her qualifying payment can be as little as nothing each month. If she remains in the military or works for a government or non-profit employer then after 120 payments her federal student loans will be completely forgiven. See this page for more information.

When it comes to the private loans, she is basically stuck. No programs exist besides what the lender is willing to offer. If she gets posted on active duty there are some benefits to stop collections or reduce the interest rate but not to reduce the balance. But if she is on active duty then her private loans should be capped at a maximum of 6% interest. “The SCRA covers all Active Duty servicemembers, Reservists and the members of the National Guard while on active duty. The protection begins on the date of entering active duty and generally terminates within 30 to 90 days after the date of discharge from active duty.” – Source

I understand your concern and I would suggest you persuade her to seek medical help for her depression. Depression just makes debt problems worse. If she can get the depression under control then it will help her to see a way forward with a bit more hope.

For your student loans, if this is a private student loan then it might be you can stop a legal action if you are sued on the debt as it might be past the statute of limitations in the state where you live. You would need to talk to a local attorney who is licensed in your state to better understand how to deal with this.

If the old student loan is a federal student loan then I would talk to the loan servicer about rehabbing the old loan. You can then get on an income driven program once the loan is out of default.

As far as your overwhelming amount of debt goes, the first stop should be to talk to a local bankruptcy attorney to get your finances quickly reorganized and get a fresh start, quickly. See this and this to learn the reality of bankruptcy.


Big Hug!
Get Out of Debt Guy - Twitter , G+ , Facebook
If you have a credit or debt question you'd like to ask just use the online form .