08/01/2013 11:24 am ET Updated Oct 01, 2013

I Have High Private Student Loans and Low Income. - Kelly

Huffington Post Reader Question

Dear Steve,

I have approximately $220,000 in private student loan debt, all of which I got with a co-signer.

I earn $39,000/year and take home approximately $1010 every two weeks. I have been living off a friend since I graduated in 2009. Because of immigration reasons, I have only recently been able to explore working elsewhere to increase my earning potential.

Unfortunately, finding jobs right now is quite dismal. I have contacted the loan agencies to inquire about lowering my payments, but they have been unwilling to do that. They have only offered consolidation but I would need a co-signer for that loan. Since I do not have a co-signer, consolidation is not an option. I haven been so strapped financially for so long, not to mention living off my friend, that I am at the point where bankruptcy is beginning to sound like an option.

I hate to ruin my credit and would much rather satisfy my obligation to repay my loans, but what do you think my chances of success are with bankruptcy?

How would it affect my ability to rent an apartment, get a job (some places will do a credit check), buy a car, and so on in the future?

Do you know of any attorneys in the triangle area of NC who might be willing to take on my case? Are there any - any - other options for private loan relief besides bankruptcy?

Would filing for bankruptcy affect my co-signer? Would she be forced to pay? Would it affect her credit?


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Dear Kelly,

Since you are in the Raleigh, NC area you should consider coming to my next debt meetup gathering, details here. I'd love to meet you in person.

So it seems what we have is an enormous amount of private student loan debt that is completely unsustainable on what you are able to earn. There is no way a $39,000 a year job is going to be able to manage $220,000 in student loans.

I'm curious about what happened to your co-signer? Did they vanish?

So here is the problem with a co-signer. A co-signer bears 100% of the liability for repaying the loan and has no benefit from it, only liability. The lender requires a co-signer to go after if the other party (you) does not pay.

Bankruptcy should not be the last resort but part of the initial assessment of possible options. There is so much myth and incorrect assumptions about bankruptcy floating around that people think they won't be able to get a job, get credit in the future, or rent. All of that is just not factual across people who get the legal protection bankruptcy offers. Read this to kill the myths.

And when it comes to private student loans and especially with a strong co-signer there are not any painless options except increasing your income to a level where you can make the payments without a problem.

But I'd start your search with my dealing with student loans guide.

If you did file bankruptcy and an adversary proceeding it is possible you could get the loans discharged or substantially reduced. Others have. Read my research here.

I know two things for certain here. First, not dealing with the loans in one way or another is going to end badly. Second, the current situation is unsustainable.

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