student loan and cc debt to much with soc sec income...

[jordansname]

Hoping for some advice on handling my financial situation...

Currently my only source of income is soc sec due to my disability. I was a student studying in san diego for two years and acquired roughly 20k in student debt on top of my 10k in CC. I have tried setting up payment plans, but the burden is still to much. What options do I have... does my situation allow me to file bankruptcy and have my student loans discharged? Since my only source of income is SSI, could I just stop making the payments?

Any advice is appreciated.

[disneysteve]

Student loans are non-bankruptable as far as I know. It would take care of the CC bills, though.

Saying whether or not that's what you should do would require a lot more info - income, expenses, debt payments, etc. Does your disability prevent you from earning money in any capacity? What is your living situation? Could you move in with others or take in roommates to cut living expenses?

[Angio333]

If possible, I would look at getting off disability and working before considering bankruptcy. I believe that disneysteve is right, student loans are not usually non-bankruptable.

[swanson719]

Declaring bankruptcy on $30,000 is just plain stupid to begin with, even if the Student loans are covered on bankruptcy. What is your disability? Because I'd bet dollars to donuts that there are still jobs out there that will hire you. Maybe not the job you want, but if you look hard enough, there is something. If you can type on a computer to post on here, then you can go to school to do something in the IT field and work on computers to some degree, even if limited by some form of paralysis.

The student loans should be on a low enough interest rate that you can cover them with the social security monthly, and the credit cards, if you let them go to collections, the collection agency will settle for 50 cents on the dollar after being in collections for 6 months. Don't give them access to your bank account, and make sure you get everything in writing. Yes, it will leave a baseball bat size ding on your credit, but it will reduce your CC debt by 50%.

You won't get ahead on your debt any, but if you go on a rice and beans diet for a while and take on a room-mate and get into some low cost housing, you should be alright. Drop the car-payment, if you have one. Sell it, buy a beater, and that will save the payment, and probably at least half the insurance. Buy long term care insurance too. If you're seriously disabled, what happens when you have to go to a home or something? They get very expensive very quickly. I mean, I hate for all that type of stuff to happen, but a nursing home can crack and scramble a nest-egg in a few short months.

[Joan.of.the.Arch]

I know this is not what you're asking, but I just want to comment on advice above: Be careful if you take in a room mate because Social Security Administration might consider the room mate's share of rent and utilities to be income to you. It could decrease or end your check, so that you cannot pay your own half of the expenses. If you do not collect the rent & utility payments directly from a room mate, but allow them to pay the landlord or mortgage holder and utility providers, it is more likely to not affect your SS.

[disneysteve]

Joan, are payments based on your income before you became disabled or are they based on your current living expenses?

It would certainly be screwed up if someone gets disability payments that aren't enough to make ends meet and they get penalized for doing something responsible to reduce their living expenses. If that is the case, what other choice does she have?

[Joan.of.the.Arch]

It depends on what kind of disability payment it is, but it is never based on needs. It can be based on past earnings if one has been in the work force sufficiently long. Or if one has not been in the workforce long enough, has been disabled since childhood, or has never been able to work then there is a standard payment. One program is "SSI" and the other is "SSD," yet generally both are called disability. The one that is based on past social security contributions and time worked is the more generous one.

Yes, there are built in problems with trying to transition off of it even when there is hope to do so. A related problem that I've mentioned here before is the limit on savings that SSI imposes. If one does have a car and sells it-- bang-- you now may have more money than SSI allows. If you scrap and save to move to a safer more appropriate apartment, you may hit that limit. As Medicaid is administered in my state right now, canes are not even covered. Crutches and wheelchairs may be, but usually only the most basic kind. So if someone on SSI is trying to save to buy a really good wheelchair so they can get out to work in a sheltered workshop (or wherever), their disability payments can be stopped if Social Security knows they have $$ in the bank. For some years my state was doing better by Medicaid recipients, but right now, things are in the doldrums, shifting more expenses back to the individual, and that can affect disabled people's SSI. Those who qualify for Medicare (usually retired or permanently disabled) seem to be better off.

In reality, I suspect a lot of people hide what they are doing to help themselves when the long term effect would just be to keep them stuck on disability even longer.

[disneysteve]

Originally Posted by Joan.of.the.Arch

In reality, I suspect a lot of people hide what they are doing to help themselves when the long term effect would just be to keep them stuck on disability even longer.

I agree. I think the rules just drive everything under the table. Take in a roommate but get the rent in cash. Get a side job that pays in cash. Just keep everything off the books so it can't be tracked.

[Snodog]

On some financial show I was watching I think I heard that if you become disabled that you can have the student loans discharged. You may want to check into this.

[Snodog]

This may help.

I wish you the best of luck in your situation.