Bankruptcy to get rid of student loans? Forum

[IAFG]

That case is also way different. Paying down your homestead mortgage is transferring the money to yourself in a way that will be protected from creditors.

I do insist on not understanding.

It's not way different on the reasoning, and in that case the court didn't even look at unjust enrichment (and it almost certainly never would because of the special status a "homestead" has as an asset). It's not about where the money ended up, it's about why it was moved from one bucket to another, and then why the Debtor petitioned. Moving debts and liabilities around with the intent to ultimately jilt creditors is what courts look at when they're determining fraudulent intent and bad faith filings. The only way to sneak this by is to conceal one's true intent. Due to the sums involved, the obvious benefit of converting non-dischargeable debt to dischargeable debt, the financial habits of a Debtor in this situation otherwise, and the willingness the creditor will almost certainly have in making sure the Debtor fails, this is very unlikely to be successful in BK court and even less likely on appeal.

[IAFG]

Your credit card debt used to pay of the student loans would then become non-dischargeable (because it was used on non-dischargeable debt).

Says what court precdent? This sounds like assumption.

It's actually the exact opposite. If it's not a consolidation of student loans, it's very unlikely a Debtor is going to be able to claim to have the same status as the original student loan lender. But the creditor doesn't need to rely on that.

[2012JayDee]

Why not just default on the student loan? Your credit is ruined either way.
In the unlikely event you actually have the credit worthiness to get a credit card(s) that has a high enough limit to allow you to pay off your debt, if you don't pay the credit card you will ruin your credit. If it's in bankruptcy that's a minimum of 7 years. Ironically, you will have to find the money to pay the bankruptcy attorney.

But you would do better just calling the student loan lender and telling them you don't have a job or any way to pay them and attempt to have the loan placed in forbearance or have the payments set up so that you're only paying the interest, or even only paying a small percentage of whatever salary you may come by.

Bottom line is--the credit card thing is just not realistic. Bankruptcy is not automatic. It's a process that involves a judge determining the circumstances that led you to need to claim bankruptcy. I'm pretty sure they're going to see right through the credit card scam. But, they could still prevent you from going bankrupt and force you to pay off a portion of the credit card debt, which undoubtedly will have a much higher interest rate than your student loans (federal not necessarily private).

You are putting the horse before the cart. The bad credit dosn't come until you F it up.(Duh)

Everyone in college should have perfect credit. I know my score is like top 10% in the nation according to the 3 agencies that are in charge on it. Everyone has great credit before bad. (Duh)

This is a completely inaccurate statement regarding how credit works.

Credit is not a debit account. They don't start everyone with perfect credit and then take away points.
Your credit score is a determination of your credit worthiness, which must be proven over time, by managing multiple types of credit accounts.
People in college don't usually have good credit at all. Not having negative credit history does not mean you have good credit. Having bad credit or having no credit (usually people who are young) have not proven their credit worthiness because they have no credit cards, mortgage, revolving, or installment accounts. It's not until after you set up credit IN YOUR NAME, and pay your bills ON TIME that you begin to establish a credit history (by definition a history means over a period of time).

Saying that your credit score is in the top 10% of the nation is also a very interesting statement. I'm curious as to whether you actually know your 3 credit scores. When you receive a credit report they don't typically tell you where you rank since your credit score is just a snapshot of your credit at a given moment over the last 30 days and can change drastically from one month to the next depending on your spending habits, bill payment, credit extension and credit inquiries. You may be given a general rating such as "low risk" or "medium risk" but being in a certain percentage of the country based on your credit score is slightly unmethodical.

That being said, it is highly unlikely that a law student that is contemplating what many ITT consider to be fraud of some sort, has the credit worthiness to have access to a credit limit high enough to pay off his student loans, and to be given a credit card that has an interest rate that is lower than the federal student loan rate (6.8%) or even lower than a typical private loan. The idea of paying charging the entire balance of your student loans to a credit card (all fraudulent activity aside) is just plain stupid.

[jurisx]

All I know is all 3 credit reports have me doing better than 90% of the nation right now. You pay your credit cards and other bills, and it goes up. Not hard. Pretty easy really. Most can pull it off.

[dresden doll]

All I know is all 3 credit reports have me doing better than 90% of the nation right now. You pay your credit cards and other bills, and it goes up. Not hard. Pretty easy really. Most can pull it off.

And you still won't be able to pay your loans with those awesomely managed credit cards. Life's a bitch.

[jurisx]

All I know is all 3 credit reports have me doing better than 90% of the nation right now. You pay your credit cards and other bills, and it goes up. Not hard. Pretty easy really. Most can pull it off.

And you still won't be able to pay your loans with those awesomely managed credit cards. Life's a bitch.

Thats why you take out more, much, much more. Stores are begging you to take them, and if they have the visa, mastercard, amex, or discover on them, they work at ATMs then too........yup.

[fatduck]

All I know is all 3 credit reports have me doing better than 90% of the nation right now. You pay your credit cards and other bills, and it goes up. Not hard. Pretty easy really. Most can pull it off.

And you still won't be able to pay your loans with those awesomely managed credit cards. Life's a bitch.

Thats why you take out more, much, much more. Stores are begging you to take them, and if they have the visa, mastercard, amex, or discover on them, they work at ATMs then too........yup.

you need to think outside the box, here. why go to law school? rack up about a half mil in cash advances and bet it all on black.

[jurisx]

All I know is all 3 credit reports have me doing better than 90% of the nation right now. You pay your credit cards and other bills, and it goes up. Not hard. Pretty easy really. Most can pull it off.

And you still won't be able to pay your loans with those awesomely managed credit cards. Life's a bitch.

Thats why you take out more, much, much more. Stores are begging you to take them, and if they have the visa, mastercard, amex, or discover on them, they work at ATMs then too........yup.

you need to think outside the box, here. why go to law school? rack up about a half mil in cash advances and bet it all on black.

buy me a time machine and I will do that, and put half of it in a high yield savings account for you too.(and get you a pet Dino)
Otherwise...........

[RedBirds2011]

All I know is all 3 credit reports have me doing better than 90% of the nation right now. You pay your credit cards and other bills, and it goes up. Not hard. Pretty easy really. Most can pull it off.

As someone mentioned above, it's evident you have no idea how credit reporting works. Nobody starts out with perfect credit. NO credit does not equal good credit.

[jurisx]

All I know is all 3 credit reports have me doing better than 90% of the nation right now. You pay your credit cards and other bills, and it goes up. Not hard. Pretty easy really. Most can pull it off.

As someone mentioned above, it's evident you have no idea how credit reporting works. Nobody starts out with perfect credit. NO credit does not equal good credit.

Me make it simple, me already have score.

(most people over 18 do unless you've been glued to daddys teet for the last 25 years)

[RedBirds2011]

All I know is all 3 credit reports have me doing better than 90% of the nation right now. You pay your credit cards and other bills, and it goes up. Not hard. Pretty easy really. Most can pull it off.

As someone mentioned above, it's evident you have no idea how credit reporting works. Nobody starts out with perfect credit. NO credit does not equal good credit.

Me make it simple, me already have score.

(most people over 18 do unless you've been glued to daddys teet for the last 25 years)

Me make it simple, me also have good score.

Me say, based on your statement, you don't understand how credit works or my point. Nobody starts out with perfect credit. You build up good credit. Whether you specifically have done so or not is beside the point. Your statement a few posts above suggests this.

[jurisx]

All I know is all 3 credit reports have me doing better than 90% of the nation right now. You pay your credit cards and other bills, and it goes up. Not hard. Pretty easy really. Most can pull it off.

As someone mentioned above, it's evident you have no idea how credit reporting works. Nobody starts out with perfect credit. NO credit does not equal good credit.

Me make it simple, me already have score.

(most people over 18 do unless you've been glued to daddys teet for the last 25 years)

Me make it simple, me also have good score.

Me say, based on your statement, you don't understand how credit works or my point. Nobody starts out with perfect credit. You build up good credit. Whether you specifically have done so or not is beside the point. Your statement a few posts above suggests this.

I know how scores work, I have a good score. I know because I checked (refer to my post about getting the quotes from the 3 agencies)
or just keep going in a loop, you seem stellar at that.

[RedBirds2011]

Why not just default on the student loan? Your credit is ruined either way.
In the unlikely event you actually have the credit worthiness to get a credit card(s) that has a high enough limit to allow you to pay off your debt, if you don't pay the credit card you will ruin your credit. If it's in bankruptcy that's a minimum of 7 years. Ironically, you will have to find the money to pay the bankruptcy attorney.

But you would do better just calling the student loan lender and telling them you don't have a job or any way to pay them and attempt to have the loan placed in forbearance or have the payments set up so that you're only paying the interest, or even only paying a small percentage of whatever salary you may come by.

Bottom line is--the credit card thing is just not realistic. Bankruptcy is not automatic. It's a process that involves a judge determining the circumstances that led you to need to claim bankruptcy. I'm pretty sure they're going to see right through the credit card scam. But, they could still prevent you from going bankrupt and force you to pay off a portion of the credit card debt, which undoubtedly will have a much higher interest rate than your student loans (federal not necessarily private).

You are putting the horse before the cart. The bad credit dosn't come until you F it up.(Duh)

Everyone in college should have perfect credit. I know my score is like top 10% in the nation according to the 3 agencies that are in charge on it. Everyone has great credit before bad. (Duh)

Jurisx, I am referring to this quote right here.

[jurisx]

Why not just default on the student loan? Your credit is ruined either way.
In the unlikely event you actually have the credit worthiness to get a credit card(s) that has a high enough limit to allow you to pay off your debt, if you don't pay the credit card you will ruin your credit. If it's in bankruptcy that's a minimum of 7 years. Ironically, you will have to find the money to pay the bankruptcy attorney.

But you would do better just calling the student loan lender and telling them you don't have a job or any way to pay them and attempt to have the loan placed in forbearance or have the payments set up so that you're only paying the interest, or even only paying a small percentage of whatever salary you may come by.

Bottom line is--the credit card thing is just not realistic. Bankruptcy is not automatic. It's a process that involves a judge determining the circumstances that led you to need to claim bankruptcy. I'm pretty sure they're going to see right through the credit card scam. But, they could still prevent you from going bankrupt and force you to pay off a portion of the credit card debt, which undoubtedly will have a much higher interest rate than your student loans (federal not necessarily private).

You are putting the horse before the cart. The bad credit dosn't come until you F it up.(Duh)

Everyone in college should have perfect credit. I know my score is like top 10% in the nation according to the 3 agencies that are in charge on it. Everyone has great credit before bad. (Duh)

Jurisx, I am referring to this quote right here.

I stand by it. Everyone in college SHOULD have perfect credit. Not due to your thought of me thinking they start out that way, nope, but by the idea of student loans showing up as good credit (believe it or not) and the credit card companies that give easy college lines of card credit, store credit at the mall, etc,etc, (even some utility companies and phone bills show up as good credit)

[abc12345675]

What do you guys make of all the noise being made lately about the government doing something about the loan problem? I think it's possible that in the next 10 years there will be a massive forgiveness of federal student loans.

[2012JayDee]

I stand by it. Everyone in college SHOULD have perfect credit. Not due to your thought of me thinking they start out that way, nope, but by the idea of student loans showing up as good credit (believe it or not) and the credit card companies that give easy college lines of card credit, store credit at the mall, etc,etc, (even some utility companies and phone bills show up as good credit)

There's a few things wrong with this:
1. If you're an undergrad and you began college at 18 you did not enter college with good credit. You entered with no credit because agencies won't count credit history before age 18
2. If you remained in college for 4 years and graduated and took out student loans all 4 years the years while you were in school your college loans were in deferment and did not require that they be paid. They probably weren't even listed on your credit report because they lacked any payment history at all (let alone a good payment history which would lead to a positive score)
3. If your parent's took out the loans then again you would not have the later benefit of positive payment history because they would be on your parent's credit reports and not yours
4. If you have a cell phone and pay it on time you could benefit from that--but only if the phone was originally opened in your name using your social security number and you're not on your parent's family plan.
5. If you open some college credit card with a low limit and high APR you will begin to build your credit history. But this is a vicious catch 22 because these cards usually contain low balances $500 and below (because of the applicant's poor credit history) and if you charge more than 30% of your available balance at any one point you are actually doing damage to your credit even if you pay off the balance in full every month.

Many parents used to put their college bound kids on their credit cards as authorized users which woud allow parents to "float" their good credit history on to their children. As a matter of fact, this used to actually be a rather interesting scheme. Whereby a credit card holder would authorize the maximum amount of user (sometimes 10) and the user could reap the benefits of being attached to someone with stellar credit, although they didn't have any actual purchasing power in the credit card. In exchange, the authorized users would pay the card holders a fee for allowing them to be on the credit card. Most companies have put an end to this practice either by limiting authorized users to a spouse or family member or refusing to report the authorized user to the credit reporting agencies, thus, eliminating the benefit.

So the notion that "all college students should have good credit" is really not true. Most college students enter college with no credit and build it slowly with crappy credit cards--but only if they actually pay the credit cards on time every month.
You could pay a credit card on time every month for 2 years and then one 30 day late payment can completely tank your credit score. If your score is already low this will really hurt.

[jess]

.

[Nom Sawyer]

Why not just default on the student loan? Your credit is ruined either way.
In the unlikely event you actually have the credit worthiness to get a credit card(s) that has a high enough limit to allow you to pay off your debt, if you don't pay the credit card you will ruin your credit. If it's in bankruptcy that's a minimum of 7 years. Ironically, you will have to find the money to pay the bankruptcy attorney.

But you would do better just calling the student loan lender and telling them you don't have a job or any way to pay them and attempt to have the loan placed in forbearance or have the payments set up so that you're only paying the interest, or even only paying a small percentage of whatever salary you may come by.

Bottom line is--the credit card thing is just not realistic. Bankruptcy is not automatic. It's a process that involves a judge determining the circumstances that led you to need to claim bankruptcy. I'm pretty sure they're going to see right through the credit card scam. But, they could still prevent you from going bankrupt and force you to pay off a portion of the credit card debt, which undoubtedly will have a much higher interest rate than your student loans (federal not necessarily private).

You are putting the horse before the cart. The bad credit dosn't come until you F it up.(Duh)

Everyone in college should have perfect credit. I know my score is like top 10% in the nation according to the 3 agencies that are in charge on it. Everyone has great credit before bad. (Duh)

Jurisx, I am referring to this quote right here.

I stand by it. Everyone in college SHOULD have perfect credit. Not due to your thought of me thinking they start out that way, nope, but by the idea of student loans showing up as good credit (believe it or not) and the credit card companies that give easy college lines of card credit, store credit at the mall, etc,etc, (even some utility companies and phone bills show up as good credit)

Jurisx your statements show a complete lack of understanding about how credit ratings are scored. In the post-2008 financial crisis era where credit to <20 yr olds is severely restricted, its utterly ridiculous to suggest that college kids should have anywhere near perfect credit.

[Bildungsroman]

What do you guys make of all the noise being made lately about the government doing something about the loan problem? I think it's possible that in the next 10 years there will be a massive forgiveness of federal student loans.

I recommend you rely on that. Nothing could possibly go wrong.

[jurisx]

Too bad you didn't pay for your tuition with credit cards in the first place.

live and learn.

0L's take note.

[Oban]

I think you could get away with using home equity, as long as you didn't do it specifically with the intent to declare bankruptcy and defraud your creditors.

Meaning if you took out equity and use it to pay tuition, then a few years later you default on your mortgages, you won't get boned. It's like in the bubble times when people bought boats and second cars with home equity loans.

This is probably the only real sly move you can do, and it's not too sly as you'd probably loose your house.

It's unlikely someone is just going to give you a massive loan (aside from a mortgage for your first house/auto loan) post law school when you already have tons of student loan debt, so that scheme won't work after the fact.


Everyone's best plan is to become subsistence farmers in Texas or Florida, where you get a ridiculous homestead exemptions.

[jurisx]

I think you could get away with using home equity, as long as you didn't do it specifically with the intent to declare bankruptcy and defraud your creditors.

Meaning if you took out equity and use it to pay tuition, then a few years later you default on your mortgages, you won't get boned. It's like in the bubble times when people bought boats and second cars with home equity loans.

This is probably the only real sly move you can do, and it's not too sly as you'd probably loose your house.

It's unlikely someone is just going to give you a massive loan (aside from a mortgage for your first house/auto loan) post law school when you already have tons of student loan debt, so that scheme won't work after the fact.


Everyone's best plan is to become subsistence farmers in Texas or Florida, where you get a ridiculous homestead exemptions.

So instead of useing the home mortgage to pay for the school, use it to pay off the loans and then declare?

[cinephile]

Too bad you didn't pay for your tuition with credit cards in the first place.

I know someone who did that. I think she was preparing in advance for bankruptcy, but she has a stable job now so I guess she's paying it off.

[niederbomb]

Forget credit cards and home equity. You can default on some private student loans, just not the government-backed ones. If you really wanted to plan for bankruptcy, just don't take government loans. Take a predatory private loan and then default on it. End of story.

Government should start billing law schools when students default. Or, better yet, require law schools to be the primary borrowers (after all, they're the ones charging the outlandish tuition), who then loan to students as secondary borrowers. That way, the government bills the law school, and if the student defaults, the onus is on the law school to find the former student to collect.

TTT's would shut down overnight.

[fatduck]

Forget credit cards and home equity. You can default on some private student loans, just not the government-backed ones. If you really wanted to plan for bankruptcy, just don't take government loans. Take a predatory private loan and then default on it. End of story.

but why doesn't everyone do this? it's almost like bankruptcy isn't a panacea!