The Money Coach
  • About
    • Meet Lynnette
    • Media Kit
  • Contact
  • Subscribe
  • QR Code
  • Books
  • Categories
  • Coaching
  • Hire Lynnette
  • Money Coach University™
  • The Money Coach Recommends™
No Result
View All Result
The Money Coach
  • About
    • Meet Lynnette
    • Media Kit
  • Contact
  • Subscribe
  • QR Code
No Result
View All Result
The Money Coach
No Result
View All Result

What Should We Do About Large Loans and Debt We Can’t Pay?

Lynnette Khalfani-Cox, The Money Coach by Lynnette Khalfani-Cox, The Money Coach
in Debt
Reading Time: 3 mins read
7
SHARES
114
VIEWS
Share on FacebookShare on TwitterShare on LinkedIn

A subscriber of AskTheMoneyCoach wanted a solution to their debt problems. Here is the person’s circumstances and question:

Q: After being unemployed for a year, almost losing our house and caring for a teen that has special needs, it is proving impossible to pay off the loan we have for our sons high schooling of $140,000.00.

We have now consolidated our credit card debt but the consolidation company says the school loan can not be included.

What choice do we have to help pay or reduce that loan with Key Bank? I am afraid it will drain us totally and I have two other children. One to start college next year and my husband are in our 50’s and 60’s We can never stop working for sure! Any hope?

A: There is hope for you, but you may not like the advice I recommend. For starters, you need to make some tough choices about your children’s education. Whatever school your son is attending sounds way too expensive! It’s high school, after all. You haven’t even begun to pay for his college education.

Since your Key Bank loans total $140,000 I can only imagine the massive tuition bills you must be trying to pay for your son’s high school — not to mention whatever other educational costs you are paying, or plan to pay for your other two children.

Based on the information you have shared, this situation is simply unsustainable. You said you’ve been unemployed for a year. I’m not sure if you and your husband are both out of work or just you. I also don’t know what your family income may be: is it zero right now, $25,000 or $250,000? Whatever the case, clearly those $140,000 in school loans are totally unaffordable.

This was not a wise choice given all the dire financial straits you described (near foreclosure, unemployment, a special needs child and the bills that involves, etc.).

It’s time to look at less expensive educational options for your children. And by all means, please don’t get sucked into signing for their student loans in college too. That will just put you deeper into debt. (Read these financial tips for parents of college students).

I have to question what your earning prospects might be, given that people in their 50s and 60s are – unfortunately – finding it very difficult to land jobs in the current weak jobs market. What’s more, you mentioned having credit card debt (exactly how much?) and the fact that you expect to never stop working. This leads me to believe you probably have little or no savings and likely too few assets tucked away for retirement.

So the first thing you should do, if you haven’t already, is to contact Key Bank directly, explain your current circumstances, and ask about possible loan forbearance, deferment or modification options.

If they decline to change the terms of the loan or to provide financial relief, you may want to consider bankruptcy. Obviously, bankruptcy is not a step to take lightly. And I only suggest it only as a last resort. But in your case, it sounds as if you’ve probably tried other strategies, like belt-tightening, working with your creditors, doing loan consolidation, and so on.

If you and your husband are both unemployed, it’s highly doubtful that you will realistically be able to pay back that $140,000 school loan. Plus, you are still trying to hang onto your home and manage the credit card bills and other expenses you have. If your special needs child also has big medical bills that you are trying to juggle, that’s yet another reason for you to consider bankruptcy.

So consult a bankruptcy attorney, have him or her review your total picture, and advise you about your options. If you seek Chapter 7 bankruptcy protection, you can eliminate the credit card bills, the $140,000 school loan, any medical debt you may be paying, as well as other obligations. For more guidance, read my tips on finding a good bankruptcy attorney.

Good luck to you and your family!

Previous Post

Tips for Investing in Real Estate with an IRA

Next Post

When Defaulting On a Loan May Not Be Reported to a Credit Bureau

Related Posts

household debt

Household Debt Reaches $16.51 trillion in Q3 2022

by Lynnette Khalfani-Cox, The Money Coach

The Federal Reserve Bank of New York's Center for Microeconomic Data today (November 15, 2022) issued its Quarterly Report on Household Debt and Credit . The Report shows an increase in total household debt in the third quarter of 2022, increasing by $351 billion (2.2%) to $16.51 trillion. Balances now stand $2.36 trillion higher...

Debt Snowball Vs. Debt Avalanche: Which is the Best Approach to Pay off Debt?

by Guest Blogger

Anyone who’s ever been in debt knows one thing: it doesn’t make life easy. In fact, debt can have many negative effects on one’s livelihood. For example, having large amounts of outstanding debt can negatively affect your ability to obtain any type of credit, such as a credit card or...

FDCPA

How To Deal With Out of State Debt Collectors

by Lynnette Khalfani-Cox, The Money Coach

Q: Hi, Can a debt collector that is based in and licensed in the state of Delaware, collect a debt from me in California? Also, I know California no longer requires California agencies to be licensed, however they have broken 3 possibly four of the FDCPA rules  and I would like to report them,...

debt collectors

5 Tips to Protect Your Paycheck from Wage Garnishment

by Lynnette Khalfani-Cox, The Money Coach

Do you have a lot of unpaid debts? If so, your creditors may threaten your paycheck with wage garnishment. Wage garnishment occurs when a court issues an order to withhold a percentage of your paycheck until your debts are paid off. For large debts, this can be financially devastating. Is...

get out of debt

The Pros and Cons of Paying Off Someone Else’s Debt

by Lynnette Khalfani-Cox, The Money Coach

Managing your personal finances wisely is one of the hallmarks of a responsible and mature person. Unfortunately, not everyone is able to or willing to handle their own financial affairs. Sometimes money problems occur as a result of circumstances; other times poor decisions play a role. Either way, it can be...

jail debtors prison

4 Crazy Times People Got Thrown In Jail Because of Their Debts

by Lynnette Khalfani-Cox, The Money Coach

Debtors prison was abolished in America well over a century ago. But that doesn’t mean you can’t get arrested or locked up for past-due debts. Here are four crazy instances in which authorities have hauled people off in handcuffs and taken them to jail in connection with having overdue bills....

debt detox

The 5-Step Debt Detox That Improves Your Finances and Health

by Lynnette Khalfani-Cox, The Money Coach

If you’ve resolved to improve your finances in 2016, now is a great time to do a debt detox. Many people are still in their holiday debt hangover, so the beginning of the year gives you a good opportunity, and a good reason, to get back on track financially. If...

Load More

Popular Posts

  • Car repair

    What to Do If You Can’t Afford a Car Repair Bill

    1376 shares
    Share 550 Tweet 344
  • What to Do if Your Spouse Stole Money From You

    1165 shares
    Share 466 Tweet 291
  • What to Do If You Can’t Afford to Leave Your Spouse

    1102 shares
    Share 441 Tweet 276
  • Here’s Why I Pay My Kids For Good Grades (And Maybe You Should Too)

    1008 shares
    Share 403 Tweet 252
  • What Do All Those Strange Codes In My Credit Report Mean?

    813 shares
    Share 325 Tweet 203
  • Do This Now If Your Wages Were Not Reported

    743 shares
    Share 297 Tweet 186
  • How to Find Out if a Debt Collector is Licensed to Collect Your Debt

    722 shares
    Share 289 Tweet 181

All information on this blog is for educational purposes only. Lynnette Khalfani-Cox, The Money Coach, is not a certified financial planner, registered investment adviser, or attorney. If you need specialty financial, investment or legal advice, please consult the appropriate professional. Advertising Disclosure: This site may accept advertising, affiliate payments or other forms of compensation from companies mentioned in articles. This compensation may impact how and where products and companies appear on this site. AskTheMoneyCoach™ and Lynnette Khalfani-Cox, The Money Coach® are trademarks of TheMoneyCoach.net, LLC.

©2009-2023 TheMoneyCoach.net, LLC. All Rights Reserved.

RSS / Sitemap /Submit an Article / Privacy Policy / LynnetteKhalfaniCox.com

No Result
View All Result
  • Books
  • Categories
  • Contact Lynnette
  • Get Coaching
  • Hire Lynnette
  • Money Coach University™
  • The Money Coach Recommends™
  • Home
  • Subscribe to Newsletter
  • QR Code

©2009-2021 TheMoneyCoach.net, LLC. All Rights Reserved.

Welcome Back!

Login to your account below

Forgotten Password?

Retrieve your password

Please enter your username or email address to reset your password.

Log In

Add New Playlist