Get Out of Debt Guy

Migraines, Unemployment and a Lost House

Posted August 14, 2013

WRAL Reader Question

Dear Steve,

I have Sallie Mae loans and government loans for ITT Tech from 2006-2008 for $22,00.

I was diagnosed in late 2007 with fibromyalgia and migraines. I have since been unable to find meaningful employment in my field. My last job was 10.75 an hour. My condition continues to get worse and I am unable to work now.

They garnished my wages in 2012 and I lost my house which in turn made me lose my job. I now am considered "homeless" since I live wherever someone has room for me for however long I can stay there.

Is there anything I can do to get rid of my student loans? I have no money except for my monthly food stamp allowance.

Pamela

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Dear Pamela,

I'm so sorry to hear about the struggles you've been facing. It sounds like it has been a slow path to the point you find yourself at today.

Dealing with the student loans is very possible. But before we launch to tackle that it is important for us to first think about your earning potential moving forward. From what you shared it seems your condition is worsening and unless we deal with the underlying medical issues first, any debt solution is not going to move you much further ahead.

It is also not clear if the Sallie Mae loans are federally guaranteed or strictly private loans. 

The good news is there are some good options for your loans at this moment. To get the options in place it will not cost you any money. Depending on your medical status, you may qualify for disability loan forgiveness if you are permanently disabled because of your medical situation. If not, then before we can tackle the student loans with a bankruptcy approach, you should at least try to enroll the federal loans in the income based repayment programs available. Your payment can be as low as $0 per month.

You can find specific information about these student programs in this guide. Please review the information for both a disability discharge and income contingent repayment programs.

If you take action now it should prevent a future administrative wage garnishment for your federal loans as long as you are seeking help under one of those two programs in the meantime. 

But to address the larger underlying life and medical issues in general you should visit Benefits.gov to find out what public assistance benefits you may be entitled to. If you are not currently receiving medical care I would suggest you apply for Medicaid and let's get your medical issues under control so you can get healthy enough to find meaningful employment and income.

You should also use the awesome site at Benefits.gov to see what other public assistance programs you might qualify for. Every dollar in eligible benefits is a dollar you are giving away by not applying for it if you are eligible.

If you do have private student loans and can't afford those payments right now, they should not be able to garnish your wages and if they did decide to sue you right now, you would be able to negotiate a full or partial discharge with them at that time.

But let's not get ahead of ourselves and let's tackle the life issues first.

Does that sound like a reasonable plan?

Steve 

Steve Rhode
WRAL Get Out of Debt Guy

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About this Blog:

Steve Rhode has had careers in opthalmology, real estate and as the head of a nonprofit debt counseling firm. On his blog, he offers hard-won, free advice about getting out of debt, consolidation and making the right choices as you manage your money.