Declaring Bankruptcy – Old Remedy for Student Loans

I did not realize bankruptcy of student loans was a problem. (actually I never heard of it) I do not think the requirements are that bad, with the exception of #3 having to have tried to reply the load back in 5 years. The job market is not that bad as of yet.

As as far as being a problem;

I wonder how many that declared bankruptcy were loans that put them through law school?

The best way is for the new college grad to use all the brand new credit cards that come with graduation to take cash advances like crazy, use the cash to pay down the student loans, and then declare bankruptcy to erase the credit card debt.

Don't pay off the loan with those handy checks the credit card company gives you, though, because the credit card company will accuse you of fraud; instead, make them out to cash, put the cash in your bank, and then write a bank check to pay off the student loan. That way, they can't "follow the money."

This is considered sound advice, except for the use of credit cards, which have a very high rate of interest.

The main precept is that it is not how much money you have, but how much money you have access too.

Geneen of ITT did recommend borrowing all you could and buying all you could from bread making companies to rocket satellite launching companies.

Later some did note that though this was a great theory, some did not know what they were really doing with stuff way beyond any of their experience or expertise, and it became there was this turn towards, "Don't get too far from the Knitting."

Okay, No, Yeah, that's right.

Buy a car and get a credit card and then write a check to cash?

Who signs the check?

Okay, I got it, the important thing to do is run up all the debt you can, then declare bankruptcy!

Apparently if you do that as soon as you can, right out of college, you get to keep an awful lot of stuff.

I hear that the best thing to do is buy a very expensive "Homestead."

"What do you do?"

"I'm a buyer."

"Where'd you learn to buy stuff." "I went to the University." "What do you buy?" "I buy great stuff, like real estate and stocks and bonds." "Do you care about the price?" "No." "Why not?" "Well it doesn't matter." "What do you mean it doesn't matter!" "It doesn't matter, the price doesn't matter." "Okay, why doesn't it matter?" "As long as I am just stupid I can go bankrupt legally."

You are a fool if you think they cannot 'follow the money'....the scenario you suggest is a Big Red Flag.....

Once the cash advance is mixed into other cash in a checking account, then there is no direct correllation between the advance and the student loan payment. Hence, the credit card company cannot prove fraud. If the student paid on the loan using a check from the credit card company, then it is fraud, because the credit card company can claim that the student had no intention of paying back the advance. Once the funds are mixed, the link is gone.

That’s what Every bankruptcy attorney tells their client to do before declaring bankruptcy. But before you do,... that ask for your credit card so they can charge you before you declare bankruptcy.

it sounds unscrupulous, but when the bankruptcy judge dismisses your debt, that would include the Credit card company.

what I also feel is, the people that didn’t do their due diligence and took out 6 figure student loan for a unsustainable degree, on a over satiated market, that if they do get a job, if their lucky, they may get a starting salary of 28,000.00/year.

becoming a social worker comes to mine.

I remember the Clinton Administration tried to get a judge on an appellate court somewhere, and when it was found out that she made about $180K per year and had defaulted on her student loan for law school, she was swept under the rug.

You forgot to mention that, thanks to Lockhart v. US 2005 (O'Connor), the Social Security Administration now has the right to garnish Social Security payments and apply them to gov't backed student loans in default.

If you are an American: don't get old, don't get sick, don't get poor, and most emphatically, do not borrow money to go to school.

The IRS also withholds tax refunds and applys them to student loans.

Student costs back in the 70's aren't as bad as they are today.

They say $19,000 is the average student loan debt.

My student loan debt is $64,000 and my payments amount to almost as much as my mortgage payment, which in itself help pay for some of my college costs through refinancing. I'm paying $1200/month mortgage payment and $800/month on student loans, that coupled with my regular living expenses is more then what I make.

I can't get out from under my house because my mortgage balance is $196,000 and it's value has dropped to $110,000.

I figured when I got my degree my income would increase enough to compensate but it didn't.

The job market is that bad in many places. I can't find another job that will pay better.

Not going into your personal income,

But without your degree, would you be better off?

I can't get out from under my house because my mortgage balance is $196,000 and it's value has dropped to $110,000.

Your not alone, but I think few at the level. Consider your options.

That brings up the problem with the housing boom, like for people who "Flip" houses. Sure one could say that was speculation, but at the level it was at. It generated a false value.

Yes, without my degree my mortgage would be around $100,000 or less by now and I would have no student loads to pay.

They only increased my wage to about an additional $2.50/hr after getting my degree. Which wasn't bad when we were getting a lot of over time but now we are really slow.

bad hand.......

not to mentioned the added stress.

Once I got started and had so much invested already after a couple years, I decided I might as well go all the way baby.

I couldn't investing several thousand dollars already and quitting with nothing to show for it, at least now I have something to show for it and maybe eventually something will change for the better.

I guess you just have to be a big banking instution or automobile manufacturer to be able to default on loans that the general public has to pay for.

I just wanna know where my bailout is. Luckily I only have about 16k in student loans to pay for but I have yet to get a gain in salary from it.

I can even say I broke even.

The last line in that statement was meant to be "I can't even say I broke even"

hey, thanks for this great article and now I this thread is quite old but probably someone here knows a good company where I can take a loan? Thanks in advance!