THE BLOG

Mental Health Issues and Student Loans Are Keeping Us Down

08/05/2013 09:04 am ET | Updated Oct 05, 2013

Dear Steve,

Our family filed bankruptcy in 2007 - our son has mental health issues and we accumulated a LOT of medical bills before the mental health parity act. The only debt remaining was our mortgage and student loan (with Wells Fargo).

I borrowed approximately $50,000 but I had to defer for many years because I haven't been able to get a full time job I only make 20,000 p/year. My loan is now at $143,000 and I still make 20,000 except my husband lost his job 6 months ago and took a huge pay cut (over 30,000) per year.

We are trying to keep our house out of foreclosure and my student loan has gone into default. I am 51 years old and I will never repay this loan in my lifetime.

What do I do? Can I refile bankruptcy? Will they renegotiate my loan to an amount close to my original borrowing amount? When I die will my children be responsible for what is left?

Deb

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Dear Deb,

It certainly sounds as if you've faced quite an ordeal. To ease your mind, as long as nobody in the family cosigned for any of your debt, when you pass, the creditors can only look to you estate for any payment. Debt is not inherited.

Ultimately money troubles are the result of too little income and/or too much debt. In your case that certainly appears to be true.

You could not file a chapter 7 bankruptcy again right now if that is what you filed before, but you could file a chapter 13 bankruptcy to get protection from your creditors and a payment you can afford based on your income. If you can afford your regular mortgage payment a chapter 13 bankruptcy can stop a foreclosure as well.

You can click here to find a local bankruptcy attorney and talk to them for free about your specific situation. Get the facts and then you can make an informed and educated decision if bankruptcy is right for you.

Other people in both a chapter 7 and chapter 13 bankruptcy have been able to get their Sallie Mae student loans either partially or completely eliminated. You can look at cases from 2012 here.

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