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Hello Lee,
Debt is suffocating me. I'm a 40's married man with 3 young children to take care of, a mortgage to pay, car payment and a host of other bills. The thought of them, bother me. My student loans from 20 yrs ago will never be paid as I haven't seen the principal budge in years, only go up. I'm on forbearance at the moment with no real hope of ever seeing it gone(50K worth). I have a mortgage(1000/month) which also will never be paid in my lifetime, a car payment(7 yrs paid and still 5K left), credit card which just charged off(2500), and the numerous monthly bills that I can't keep up with. I read that a law was reenacted about bankruptcy and student loans in 2013. My question is, what are my options? I can't afford it all. There is no way I can pay those things. I'm struggling week to week, check to check and it isn't nearly enough. I appreciate your time.
Thank you.

Unfortunately student loans remain non-dischargeable in bankruptcy and it's a national crisis or about to be as the student loan debt is close to exceeding the credit card debt in the US --

I'm not sure chapter 13 would help but let's sketch out some numbers and see.

If the interest rate on your car is more than 4.5% and/or the car is worth less than what you owe, it can be "crammed down" in chapter 13 to current value and what's called "Till" interest (the 4.5%) then spread out over 5 years.  Unsecured creditors typically get only a % of what's owed in 13's, and not until the senior priority claims are paid (car, delinquent mortgage payments, taxes, for example) and they get 0% interest.

You can do an amortization chart on line on what your car payment would be over 5 yrs with reduced principal and interest to get an idea -- add $2500 attorneys fees as an example (that gets paid too, before any other creditors) sub total;  then multiply that x 1.10 for a total you'd pay back over 5 yrs;  the trustee gets a "rake" of all payments made not to exceed 10% which is why you do this (or you could multiply the total by 10% and add that to the total -- same thing).

IF this pencils out for you, I'd suggest getting a consumer bankruptcy attorney on board right away and you can go to the national consumer bankruptcy association (nacba) which has lists of local members;  and see if this will really work after they look it over.

From what you describe I don't believe a chapter 7 debt wipeout would help as you still have to pay for the car & student loans.

Once under way in a 13, you're completely protected from any creditor actions (ie. lawsuits, garnishment of wages etc) and have the peace of mind knowing that you'll be debt free in 5 years with the exception of the student loans -- and perhaps without the other debt having to be paid then, you can double up on the student loan payments.  Chapter 7 also protects you from creditor actions.

On the house payment -- in most areas rent would be the same as what you're paying now;  keep in mind most of what you pay on the house is tax deductible (interest & property taxes) whereas paid rent is not deductible at all.

I hope this helps.  

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Consumer bankruptcy questions invited. I've been filing Chapter 7, 11 and 13 cases since 1985 in Calif and Arizona. I do NOT do homework questions. Let me know what state you're located in when you write. My bankruptcy practice is limited to California and Arizona but inquiries from other states are welcome. Your local jurisdiction determines exemptions. Find more background information at our website, Individual Chapter 11 and small business chapter 11 questions invited. We can also advise on the creditor's side if for example you have a fraud case, money judgment etc against someone who has filed (or is threatening) bankruptcy. We have filed and defended numerous adversary complaints in bankruptcy court and opposed trustees' demands for turnover of assets from time to time.


My partners and I have filed over 5000 consumer and small business cases to date in California and Arizona.

I've been a member of the California bar since 1984 and Arizona since 2004; also a member of the National Association of Consumer Bankruptcy Attorneys, Bankruptcy section of the Arizona State Bar, Tucson Association of Consumer Bankruptcy Attorneys, Arizona Consumer Bankruptcy Counsel and American Hellenic Educational and Progressive Association (AHEPA).

I've written a booklet on land trusts for real estate owners, players and dealers, and co-authored a special edition of "Stop Sitting on Your Assets". I was a writer of a monthly law review article relating to California real estate issues and pending and recently enacted legislation.

Attorney at law, experienced in trial procedures, adversary complaints filed and defended and numerous claims objection proceedings as well as filing cases for consumer and small business debtors.

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