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[larry]

My 25 year old fiance has ~$52k-55k in total debt. Roughly $40k of this is in the form of 2 student loans. She has an Art degree and the jobs in her field are only paying $10-13 dollars an hour, usually with no benefits.

We live in California where the cost of living is somewhat high (even though we don't live in a fancy area), and she is currently working FULL time 60 miles away. Every month she is able to make the minimum payments on everything but she can't pay any more. She has no car payment, doesn't spend much, but is still in the RED every month by at least $100 which means that every year she puts at least another $1200 on her credit cards just to survive.

I keep telling her that I think the only way out of her situation is to declare bankruptcy but she doesn't want to do this because she says that this debt is her responsibility and therefore she's going to pay it. I do respect that she is taking responsibility for her debt but honestly I don't see HOW she can ever pay this off with her career field's earning potential.

What I'd like to ask is, what would you do if you were her?

Is there any way she can discharge some of her STUDENT loan debt?

I know the new bankruptcy laws have made it much harder to qualify for bankruptcy but I don't see how she is expected to survive when she has a $500 a month unsecured liability payment for the next 25 years and a job that only pays $12 with no benefits. Also if we get married and she stops working I'm going to have to assume her debt, (i.e. start making her payments).

Any advice, personal experience, or expertise would be greatly appreciated.

[marlan43]

Taking liability for your on actions is creditable. Bankruptcy only makes things a whole lot worse. It forces you to hand back your passport for 10 years, and have no lending power for 10-15 years. Have all your assets stripped from you and plunge you into a black hole. The correct thing to do is talk things out with the creditors, banks etc.. that she owes the money to. She is still working so she could possibly refinance her current position. This allows her to pool her debt into just 1 loan and 1 repayment leaveing her with more money to save for a change. She should try it. It works!

[nissim42]

As far as I know, student loans cannot be discharged through bankruptcy.

The whole capitalist system is corrupt. We work hard under massive levels of debt so that the banksters can live like kings. When the banksters have looted society to the brink of collapse, the government awards them trillions of our dollars.

"Capitalism is the legitimate racket of the ruling class." -- Al Capone

------------------

Welcome to Fleece U.
Barbara Ehrenreich
New York Times bestselling author
Posted: September 7, 2007 10:38 AM


Welcome to Fleece U., where our mission is to take feckless teenagers such as yourselves and turn them into full-fledged citizens of our economy, meaning, of course, debtors.

Many life-changing things will happen to you in the next four years. You will make lasting friends, including perhaps the love of your life. You will drink more than you ever thought possible and bitterly regret it in the morning. You will lose your virginity, if you happen to have brought it with you.

Our stellar faculty ardently hopes that along the way you will be amazed by calculus and charmed by the tipsy conversation between Alcibiades and that wily old radical, Socrates. There is also a general expectation that you that you will come out of here with some hazy notion of spelling and grammar.

But never forget that your real purpose here is to shake off the pointless freedom of youth and assume the burden of debt. To this end, we have just raised our tuition in an attempt to keep up with such top-of-the-line institutions as George Washington University (now weighing in at $39,210 a year, or $50,000 with room and board). You will find us also charging a plethora of additional fees -- a "student activities fee," a "technology fee," and an "incidentals fee." In addition, we will be experimenting this year with a "snow removal fee," a "lecture hall seat-use fee," and the installation of pay toilets in the dorms.

It would be short-sighted to resent these fees, since they provide valuable experience in bill-reading, and will come in handy when you confront your own personal monthly utility statements. At present we do not charge any additional tuition for this training in bill-reading, though we are considering adding a special "fee fee" in the future.

Another thing that will help ease you into the status of debtor is the price of your textbooks -- about $120 to $180 for a new, graffiti-free copy. True, this seems high when you could buy a hardcover of Harry Potter and the Deathly Hallows for $20 or less, but the aim is to teach you that a book is something to treasure (and, again, we charge no extra fee for this lesson).

On average, you will graduate with a respectable-sized debt of $20,000, which will enable you to establish your all-important "credit history." If we have succeeded in our educational mission, you will be a first-rate debtor, capable of making minimum monthly payments much of the time. As fresh offers of credit cards and home equity loans pour in, you will beam with pride at your achievement.

Please note carefully that Fleece U degree cannot guarantee you a future income that will allow you to pay off your debts. Many of our most promising graduates are now, three or four years later, working for $8-12 an hour serving up lattés, counseling disturbed youth or creating business computer networks. They are set for a lifetime of debt, and we are proud that they first began to accrue it right here, on our lovely mock Oxfordian campus.

We don't have to remind you not to stigmatize debt as a condition associated with poverty. In 2006, for the first time, the average household's debt exceeded its income. By becoming a debtor, you will have entered the American mainstream! We have confidence that you will go on to mature effortlessly from college debt to car loan to mortgage to medical debts occasioned by the ever-growing gaps in coverage.

You will see the value of all this debt when the day comes, as it inevitably will, when you wake up and ask yourself, "Who am I and what am I doing here?" You will be tempted to take long walks, read the Upanishads, or try out for a new career as a trophy spouse.

In a crisis like this, you could easily spend thousands of dollars on life coaching and motivational DVDs. But you won't have to, because you'll have debt to keep you going. You will get up, shower, and toil faithfully in your cubicle year after year until, in the fullness of time, your family acquires the debt for your interment (at which point we trust you will have remembered Fleece U in your will.)

So think of debt as the great motivator. Think of it as our gift to you. Because for at least the next academic year, we are not even thinking of charging for it.

http://www.huffingtonpost.com/barbara-ehrenreich/freshpersons-welcome-to-d_b_63455.html

[talbot]

Tell her to consider becoming an officer in the military for financial stability. It doesn't matter what degree she has, just as long as she has one. An O-1 officer now makes $2655 a month straight out of training, plus all the usual military benefits. There's a 100% chance she will get promoted to O-2 after approximately 18 months service. An O-2 officer will make 3059 at 18 months service and 3484 after 24 months service. Tell her to join the Air Force or Navy if she wants a far less chance of being deployed to Iraq or Afghanistan. Joining the military might be an radical option but if she wants to assume responsibility and pay her debt then that's what i recommend.

[laureano97]

When there might be other options, bankruptcy is rarely the best choice.

Count yourself lucky to have connected with an honest and responsible woman who is comfortable with honoring her commitments! Rather than persuading her to renege, show her the respect and support she deserves!

There are many possibilities for the future in the scenario you've so clearly described. For one thing, the bulk of your fiance's debt is probably at relatively low interest rates, and the principle is gradually declining; eventually the debts will be paid off -- the future is bright! Another matter is the prospect of your getting married. Aside from having children, there's nothing that would require her to quit working. And there are more options opening up all the time for combining a career with child-rearing, like working from home (telecommuting), job-share or flex time, child care facilities at the job site, etc.

But the most compelling potential, as I see it, is the fact that this professional woman is only 25! She has only a few years of experience on the job, only so much status and responsibility. There's another 40 years of professional growth ahead! The idea that "her field" only pays $10-13 per hour with no benefits doesn't take into account the potentials of future promotions or possible entrepreneurship, or maybe teaching in the future. With your help, she could open a business of her own that takes advantage of the experience she's gaining now and adds her own creative twist to it.

In addition to that, inflation is the law of a "growing" economy, so even as the debt level declines, the wage levels are most likely to rise. It might be a couple of more years before a position like she has now will be paying $12 to $15 per hour, which would go a lot further in making those $500 monthly payments. And by that time, she might be supervising the person working for that wage!

Don't try to reform this honorable lady into lowering her high standards. Resolve, instead, to match her level of commitment and help her meet her goals.

Best wishes to you both!

[eddis]

ya the laws have changed the last few years? but i do know that if she files bankruptcy certain debts like government loans you can't take off or all of it? check the new rules first she may still have to pay some of the student loans??

[hyun-su]

first she should look for a job that pays more, or a second part-time job. if that doesn't work, she can go bankrupt, but it really messes up your credit for 10 years.