student loans and ch. 7 bankruptcy

Student Lounge College Life
1

<p>well I'm 20 I make $9/hour (about $10k/year after taxes) and I'm $62,593 in debt. By the time I finish writing this thread, I'll need to add another 25 cents or so, due to interest.</p>

<p>Anyway, approx $35,000 is student loans, the rest (about $28,000) - is credit card debt.</p>

<p>I'm gonna file chapter 7 which obviously won't discharge the student loans.
So should I just max out my credit cards (I still have about $15,000 of available credit) in the next couple months before I file for bankruptcy? I know a lot of stuff I can buy and resell with less than 5% depreciation --so that's my plan as I can't use cash advance before filing ch. 7.</p>

<p>and oh yeah i know.....I'll be living with my folks for the next 7 years =P</p>

2

<p>I'm not overly familiar with bankruptcy or maxing out credit cards (I refuse to get one while in college, I know what I'd do with it)...but $28000 holy crap! You're 20, so you've been in school 2 years? Wow...(this is coming out sounding meaner than I intend, I swear!)someone here is bound to know about bankruptcy and maxing out but I'm still in shock. </p>

<p>Good luck with whatever you choose to do! And might I recommend keeping credit in check in the future?</p>

3

<p>No, you should not max out your cards. Do you realize that every one of us who actually pays our debts ends up paying for yours as well? It is no different then stealing merchandise from a store. You obviously have learned nothing from this whole ordeal.</p>

4

<p>It is now much harder to discharge consumer credit card debt than it used to be. The only way you can get a reasonable answer to this question is to consult a bankruptcy attorney. Don't assume that "maxing out your cards" and then declaring bankruptcy will get you off scot-free; it likely won't.</p>

5

<p>
[quote]
Anyway, approx $35,000 is student loans, the rest (about $28,000) - is credit card debt.

[/quote]
</p>

<p>And you are not even done with school yet? If you have 35k in student loans after two years of schooling, then I would really think of transferring or something, but that is just my opinion.</p>

<p>How did you get 28k credit card debt? Did you have to use credit cards for schooling also? I do not understand how a 20 year old can accumulate that much credit card debt and I mean no offense to you at all.</p>

<p>
[quote]
I'm gonna file chapter 7 which obviously won't discharge the student loans.
So should I just max out my credit cards (I still have about $15,000 of available credit) in the next couple months before I file for bankruptcy? I know a lot of stuff I can buy and resell with less than 5% depreciation --so that's my plan as I can't use cash advance before filing ch. 7.

[/quote]
</p>

<p>I would not, under any circumstances, max out your credit cards and then up and file for bankruptcy. In my opinion, no one will take your wanting to file for bankruptcy seriously, if you up and charge the dickens out of everything. I think that if any judge or attorney put two and two together with your maxing your credit cards out and then filing for bankruptcy, then they would not want to have anything to do with you at all. Those bankruptcy folks, from what I can gather, have changed their rules and stuff. So, be careful. </p>

<p>You need to seek legal counsel about this entire situation. </p>

<p>
[quote]
and oh yeah i know.....I'll be living with my folks for the next 7 years =P

[/quote]
</p>

<p>If your parents are cool with that, then lucky you! You could find a nice reputable attorney to help you consolidate your credit card debt, work on your student loans, and then build yourself up from there.</p>

<p>While you are living with your parents and figuring out your debt, please treat your parents like royalty! You might not be able to pay the light bill for them or something, but please treat them nicely, honey (^_^)</p>

6

<p>you definitely need legal advice and fast...
do not take filing for bankruptcy lightly...</p>

<p>you can call your credit card companies and try to negotiatie your debt down by telling them, in a nice way, that you may have to declare bankruptcy unless they can work with you. They would rather work with you and get something vs you going the bankruptcy route and they get nothing.</p>

<p>then once you get the debt down, you can try to balance transfer to a zero interest card..these are usually promotional deals, good for 6 months or so; when that expires you can move it to another card</p>

<p>you need to stop racking up debt and focus on paying this off, not going bankrupt</p>

<p>what are your plans for school?</p>

<p>don't commit financial suicude, get legal advice, now</p>

7

<p>
[quote]
So should I just max out my credit cards (I still have about $15,000 of available credit) in the next couple months before I file for bankruptcy?

[/quote]

Isn't that some sort of fraud?</p>

8

<p>thanks guys for the responses so far.</p>

<p>mildred:
yes, my parents are cool like that! =D ...they actually want me to live with them till I get married (age 30-35) ....but my goal is to move out by 28. I'm their youngest of course... :)</p>

<p>But yep, I'm using my cards for school and everything else.</p>

<p>Can't qualify for federal loans, so I'm having to pull out private loans. I ALWAYS keep up with my payments, which has actually HURT me in the long run (long run meaning now) --because all my creditors continue to increase my credit lines. My AMEX Blue alone has a $12k limit, others have $7k-$10k, and my FICO is surprisingly high for my situation, but within a few months it's gonna catch up and reflect the truth as I'm merely making minimum payments and my utilization ratio is going up like a rocket. Then of course the bankruptcy will kill my credit but after months of emotional turmoil and consideration -this is the best choice IMO. </p>

<p>Also to add to my debt, I've changed majors from something that was 'promising' AT LEAST $50k/year right out of college (with help of family contacts) --to now something that I enjoy a MILLION times more and will do a much better job in ...but sadly will not give me the same earning potential to pay off my debt unless I hit the lotto. I've learned well that assumption is the number one ticket to financial disaster.</p>

<p>And my relationship with money simply sucks --as Susy Orman would say. But I'm hoping this chapter 7 --IF I QUALIFY-- of course, will serve as a lesson and spank in the butt. I've really hit rock bottom and I'm ready to change. New major, new career goal, fresh start with money....</p>

<p>It can't be THAT bad --financial suicide alright, but within 4-5 years people have had luck getting it deleted off their credit reports, and worse case for me --it'll be off by the time I'm 30 when MANY are just finishing up post-grad with $150,000 in the hole.</p>

<p>but anyway.... back to my question...
there's gotta be a loophole to wipe out my student loans? :D</p>

<p>peace
2005</p>

9

<p>Nope. No such loophole. You're stuck with your student loans (and possibly with your credit card debt, too). See a lawyer.</p>

10

<p>yes - you need to see a lawyer. There are 2 types of bankruptcy, chp. 7 and chp. 11. I don't know which is which, but one DOES NOT relinquish you from your debt. It is very difficult to get the one which does now.</p>

11

<p>DH used to do bankruptcy law, and if I recall, there are prohibitions (with criminal, not civil penalties) against spending like crazy prior to bankruptcy in order to get the entire thing discharged.</p>

<p>The student loans won't go away. MY BIL used credit cards to pay for part of his last year in college and it wasn't pretty (and he was working FT and had some FA). He paid them off, but paid through the nose in interest.</p>

<p>Are your parents not aware/concerned that you have put yourself in this position? Do you know about PLUS loans for school? Have your parents ben contributing financially -- is theis debt on top of their support or because they are unable to help you? Do you realize that many employers now do credit checks on potential new hires?</p>

<p>Get thyself to a financial counselor and to your school's FA office, pronto.</p>

12

<p>Yet another reason why my parents are incredibly happy that my school doesn't accept credit cards as payment. They're already in minor debt and now are paying out of a savings account, not racking up more debt. I'm using just loans and no credit. I'm happy with the situation :)</p>

13

<p>Chapter 7 relieves you from your debt in most cases (except student loans and IRS back taxes).
Chapter 11 - consolidates your debt into one so you can make low monthly payments.
Chapter 13 - which does not apply to anyone here, qualifies as business debt accumulation.</p>

<p>Note: once you file bankruptcy and undergo credit counseling, not only will your outstanding debt be discharged but you will then be able to build your credit once again, for most people this may take 1-2 years.</p>

14

<p>"I ALWAYS keep up with my payments, which has actually HURT me in the long run (long run meaning now) --because all my creditors continue to increase my credit lines."</p>

<p>Are you serious?</p>

<p>You could always, you know, NOT use the additional credit.</p>

15

<p>
[quote]
you will then be able to build your credit once again, for most people this may take 1-2 years.

[/quote]
</p>

<p>Wrong. Bankruptcy stays on your credit report for no less than 7 years. And it could be longer.</p>

16

<p>2005,</p>

<p>Under NO circumstances should you intentionally run up additional credit card debt which you know you cannot repay prior to filing for bankruptcy protection. You need to find a board certified bankruptcy attorney in your area and get competent advice. Bankruptcy is a complex area of the law and the recent amendments enacted to the Bankruptcy Code have made it even more complicated. You should not be soliciting legal advice on a college discussion website.</p>

17

<p>I would check with <a href="http://www.creditboards.com/forums%5B/url%5D"&gt;www.creditboards.com/forums&lt;/a> for good advice and knowledge about credit issues.</p>

18

<p>One thing that I have found out about people is that no matter what their status in society or current wealth, damn near everyone has student loans. They follow you and follow you, and they will call your work, your parents, your friends, those people want their money! Short of becoming permanently disabled, there is no way to discharge student loans. Always be proactive with student loans though, they are more than willing to work with you if you call them first and tell them about future problems and/or life situations you have coming up. </p>

<p>On a related note, how in the hell do you run up $28000 in credit card debt in just two years?!?!?! I ran up about 16,000 or so of CC debt, but that was over 9 years, and included some seriously heavy drinking and paying for a lot of stuff like cigarettes and Dish Network with the CC. You should just borrow some money from a relative, use that to pay off all your debt, then pay the relative back. That is what I did, and I couldn't be happier. Not paying that credit card payment every month is a huge relief.</p>

19

<p>If your major isn't going to make you money anyways, you might want to take some time off to work, finding the best paying job possible, and catch up with interest payments instead of adding to your debt through compounding. I did this and it worked out well.</p>

20

<p>Chedva: Wrong!</p>

<p>Bankruptcy cannot be invalidated, and yes it appears and will stay on your credit report for 7 years. However, most people begin building their credit once again soon after filing and undergoing credit counseling, and this takes 1-2 years after filing for most people. Plus many people with bad credit/ or in bankruptcy are issued new credit and can apply for loans i.e. housing (sub-prime). My brother is a attorney who specializes in bankruptcy, his clients have established sufficient credit post bankruptcy, in that they have been approved for various loans and credit cards.</p>