Personal Bankruptcy

Don't file bankruptcy. It follows you WAY longer than 7 years. The law reads that they can only use it as a basis for issuing a loan for 7 years, but it stays on your report forever. Two small loopholes here. First, there's a disclaimer that they can only use it for 7 years, "except for large loans." Who decides what's large? Second, while the law says the lenders can't use it against you, if they can see it on there do you think a lender will ignore it?

Lastly, as has been mentioned, it affects SO much more than your ability to borrow. Everything anymore is affected by your credit score, insurance rates, apartments use it, cell phone and utility companies now charge higher deposits to those with poor scores... The list goes on.

So, even if you reaffirm with everyone else, your FICO score will still suck, and even with an explanation on your report you'll pay more for most everything and it will haunt you every single time you try to buy a house for the rest of your life.

It sucks that you got taken to the cleaners by a flight school. But the lending community will not look favorably upon you leaving the bill with Key. They didn't cheat you.

So, while it may hurt to do it, if there's any way you can pay off the debt without going bankrupt, that would make your life a whole lot easier in the long run, and cheaper.

Good luck, I know what its like to be squeezed financially. I didn't go bankrupt but almost did, and it was no fun.

Heath
 
Geeezzz. So airlines and ATA can use bankruptcy but you can't. What a country....

Personally, if it were me, no way I'd be paying $700 a month for nothing. There may be some down side to personal bankruptcy when it comes to pre-employment checks. Tell your story at the interview and hope for the best. If I were on the interview board I wouldn't think twice about hiring you if you declared bankruptcy in your situation. I've know guys with FAA violations that got hired at the majors...couldn't be any worse than a bankruptcy on your record.
 
I think that the best solution, if he's not going to pay the loan, is to not pay it. Just don't make any payments to the company. Don't declare bankruptcy, ever, unless they are about to kick you out of your house and take your car, too.

Look at it this way. If he has one delinquent account, even if it's written off, and a history of payments on time every time on every thing else, as well as a statement of why he didn't pay, a lender or employer is going to look at it far more favorably than if he files.

And for those who say, well, just explain it at the interview, it's highly likely that he won't even get to the interview point if they run a credit report as part of the application process.
 
I think it's a question of your security clearance. If you have personal bankruptcy history (and if you notice, the CEOs of the bankrupt airlines have no problems on their personal credit report!) then you may be a security risk. Supposedly you could be offered large amounts of cash to compromise security and you might be tempted.

It should be applied to debt rather than history I think, but who makes these rules anyways?
 
I have to agree with tonyw on this one.
Bankruptcy shouldn't even be an option, unless you can't pay ALL your bills (ie. being kicked out your apt./house or having your car repo'd). In fact, a judge determines whether you can pay your bills after looking at your income. In the end, you may not even get approval to go into bankruptcy.
I won't even go into the effects of a bankruptcy, but I would just opt not to pay the bill if you're already thinking along the lines of not paying. But, do not declare bankruptcy just to not pay your loan.
 
I haven't taken the time time to read up on all the latest ATA stuff, but I am very curious what Key Bank says about your situation? Are they willing to work with you or is it an open and shut case from their perspective? If they are willing, what options have they presented? Has anyone else from ATA made any progress w/ Key?

It is very hard to imagine that they wouldn't be at least somewhat helpful, but then again, they are a big business looking out for their own... :-)

By the way, I agree w/ most of the others. Avoid bankruptcy at all costs. It may look like a good solution now, but down the road it will make life MUCH harder. My in-laws are still recovering and it has been over 9 years.... :-(
 
Okay, since no one else has said it.... I have a CH 7 on my credit report. As far as a hard time getting a car, credit cars or house, I'm 2 for 3, and I haven't tried for the house. My car blew up a couple of months ago, no problem getting another car. Interst rate is a little higher, but I got the car and a good payment history will lower the rate. Credit card apps are a daily occurance in the mailbox as well as going straight to the scissors and the garbage can. As long as it is DISCHARGED, it's not that big a deal. If you do nothing with your credit after the bankruptcy, then it's a problem. Lenders look at what you have done to FIX the problem. Right now I am using a low balance credit card to pay for flight time, then paying it off every month. I filed CH 7 two years ago, and since then haven't been late on one single bill. My wife was laid off not once, but TWICE in the same year. We lost one car and our house in that bankruptcy, but we are much better off financially now. Student loans DO NOT GO AWAY with a bankruptcy. Key Loans may be different, but I still have my Sallie Mae loans. As long as I can get my $12-15K loan for MAPD, I'm happy. Otherwise, I'll have to wait for grandma to kick.....
 
I believe most employers only get an abbreviated version - what info they get I have no idea. Ask an HR person at any company they woudl know, maybe see what is in your file.
 
Credit flows a little easier after bankruptcy, actually, because creditors know you can't have debts discharged under bankruptcy again for another 10 years.

And not that I'd ever do such a thing, but a crafty person might take large cash advances from regular commercial credit sources (credit cards, etc) in order to shift their student loans to a form of debt that CAN be discharged in bankruptcy. ;-)
 
Bottom Line here is that you are not allowed to include student loans in Bankruptcy!
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