Key Loan and Bankruptcy

BK laws changed a year or so ago with a law Bush passed. Key might not be dischargable now if it is associated with an educational loan
 
BK laws changed a year or so ago with a law Bush passed. Key might not be dischargable now if it is associated with an educational loan

Dischargeable or not, the co-signer does take a hit. Potentially a significant one.
 
Federally backed student loans are not bankruptable, they will haunt you, or your cosigner, until the day you die. Then they go after your estate (if you have one)
 
I've never had to declare bankruptcy, but from what i've heard it is not a good idea. If you can avoid filing at all cost. Consider getting a second or even a third job to make ends meet.
 
Didn't most of those loans require a co-signer? Wouldn't they still be on the hook?

Not necessarily. I didn't have one. You just have a lower interest rate if you don't have one. Personally, I didn't feel comfortable with asking someone (my Mom) to take on that burden if for some reason I wasn't able to repay...

That being said, it's my understanding that the loan isn't something that can be erased by bankruptcy because it's an educational loan. I don't know for sure. If you find out otherwise, let me know maybe I'll join you! Haha.
 
no cosigner. just $18k in college loans besides mortgage and another small loan associated with the house. even with just those payments I'm at 92% debt/income ratio so I'm kind of forced to contemplate all avenues. cant even take on any other debt, not that I would want to, but at some point I'm going to need things. car/new roof/food/diapers, etc...

spoke with a lawyer and he thinks the Key loan was structured more as a personal loan because the money was initially distributed to me, not the flight school. honestly, just trying to scope out my options. furlough tomorrow, and back to school the next day.
 
Federally backed student loans are not bankruptable, they will haunt you, or your cosigner, until the day you die. Then they go after your estate (if you have one)

Not necessarily true, if you can show repaying it would prove a hardship you can have the loan amount reduced or discharged. For aviation loans I think it wouldn't be too hard.
 
I'm not sure I would declare bankruptcy over an $18k loan. $80k maybe but $18,000? It can't be that high of a payment. I believe you can defer payments also, check into that.

Although I'm with you, right now we are above water because we don't have a car payment, however the wife's VW is on it's last legs and I'd like to sell the thing before it completely craps out...but that means a car payment cause the wife has been outta work for 7 months. We're teetering on the edge as well. Sucks.
 
Not necessarily true, if you can show repaying it would prove a hardship you can have the loan amount reduced or discharged. For aviation loans I think it wouldn't be too hard.

Thats true, forgot about that, and I suppose if your a first year FO and that is the only loan you have you might get that by the judge. But the judge can do a lot of things, including defer it, until your making more money or discharge other debt. The likelyhood of discharge is small
 
My wife declared bankruptcy in '04. By October of '08, her credit score was back up to 700 and she bought a house on just her credit a week before we got married. Yes, someone with a bankruptcy within the last 4 years got a house in October of 2008.
 
my only concern is the Key Loan. Never considered the $18k in the possible bankruptcy. as for the "undue burden", the lawyer said in my area the judges are very very right wing conservative and there is almost no chance of them releasing the loan in that way. But, he does think the Key loan could be argued as a personal loan. Big problem is, if i declare BK and they don't dismiss the Key loan for whatever reason then I pretty much declared BK for nothing and it would still be on my record. So I'd still be in the same spot I was before but now I'd show as having had declared BK even though I didn't have any of my debt taken care of. Needless to say, Key has been anything but helpful.
 
with the relatively small loan sum, i would look at other options. while it may be a struggle for the moment, I consider anything less than about $50-75k to be too small to go with BK. It does more damage than good
 
$80k is not small. the $18k college loan, as well as my mortgage, and another loan are not being considered if BK is the ultimate decision. Those loans will be paid. The Key loan is the one being considered for BK. I've been furloughed, going back to school for nursing starting tomorrow, and I'm fairly sure my flying days are over. That being said, my "potential" earnings in the future have shrunk dramatically. Of course we all the know the pilot pay topic, hell, I could be stuck as an FO for many many many years if I get called back so maybe nursing would be a bump in pay over time. Anyway, just trying to see if anyone has any knowledge of BK associated with those old Key Loans. As for BK and the damage it does, thats relative. My situation now is FAR worse in a debt/financial sense than having to wear the "dunce-cap" for a few years while my credit improves. Chapter 7 allows for car and other loans in less than 2 years. Of course the BK shows up for many more, but at least your able to move on with your life. Again, I'm just gathering information. Do I want to renege on my obligations? No. Do I want to start a family and have a chance at a normal life? Yes.
 
So you owe $80k or $18k? I think you are confusing us a bit. I thought the Key Loan was for $18k?

Also you could always go out of country...but never come back...

How much room do you have on credit cards? You could do a balance transfer and transfer that amount to your $18k loan, pay it off, and then declare bankruptcy. The only thing is you declare right after putting it on your cards the judge most likely will throw it out. You'd have to come up with something like "I transfered to a 0% balance to reduce payment amount in the hopes of securing another job to pay it back quickly" or something. Also you might want to post on the personal finance sections of city-data.com or Money Central's forums. There is a lot of good advice there.

I wouldn't worry about buying a car with bankruptcy. A lot of people buy cars with cash so no loan is needed. Craigslist.com baby!
 
Won't your full time status allow you to defer the loan payment?

If not I think you're better of repaying the loan slowly than going BK.
 
I'm not sure I would declare bankruptcy over an $18k loan. $80k maybe but $18,000? It can't be that high of a payment. I believe you can defer payments also, check into that.

Although I'm with you, right now we are above water because we don't have a car payment, however the wife's VW is on it's last legs and I'd like to sell the thing before it completely craps out...but that means a car payment cause the wife has been outta work for 7 months. We're teetering on the edge as well. Sucks.

Better yet, call them on it. They will give you the "well......Your maximum deferment period has run out and there is nothing that we can do". If you (humbly) drop the BK word on them, they begin to see things in a whole new light.;)
 
Why are your flying days over? Just curious if you don't like it or you don't think it's worth it.
 
Federally backed student loans are not bankruptable, they will haunt you, or your cosigner, until the day you die. Then they go after your estate (if you have one)

Key alternative loans that most used for flight school (i.e. ATA, DCA, ATP, FSA, Pan AM) are not federally backed loans. They are private.

I have been wondering the same thing. let me us know if you can shed it in BK.

Also, deferring might sound like a great idea, but you're going to pay A LOT more in the long run. Its not a federally backed loan, so you cant defer it, you can only get a forebearance. So it still accrues interest, even tho you are not making payments. The amount of interest that it accrues is ridiculous. I called to find out once, and they told me it was 13 bucks a day!! Thats criminal!

its too bad that you are in this situation. I contemplated BK very seriously while i was flight instructing and my car got stolen. I am glad I didnt. I am currently deployed, so with the money i am making here, and the amount I am saving because I have nothing to spend it on, it will be used to repay a large portion of my debt. Which will help out tremendously.

Good luck! Hope things work out for you
 
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