Collegiate Contemplating Bankruptcy

Unfortunately, student loans are not dischargeable in bankruptcy court.  You really have no choice but to pay them down.  You didn't mention how long you've been in school, but if you still are, you can start paying your loans while you are still in school, as interest on these loans accrue from day one.  If you've already graduated and possibly have credit card debt on top of these student loans, use a technique called "snowballing" to get them paid off.  Here's how it works:

1.  Don't add to it.  Think of your credit card debt like dirty dishes.  If you are handwashing dishes and people keep bringing you more the ones in the sink will never get done.  Same with your credit cards--If you keep adding to the balance, they will never get paid off.

2.  Fix your minimum payment where it is right now.  For example, if your minimum payment is $50 per month, you pay $50 per month every month no matter what.  If the minimum payment changes ignore it.

3.  Line up your payments from smallest balance to the largest.  Forget the interest rate.  The emotional payoff from paying off your first debt is huge and will make you want to keep going.

4.  (This is the big key, so listen up.)  As each debt gets paid off add it's payment to the next one in line.  By doing this you are paying towards the actual amount you borrowed.  A lot of times the minimum payments are pure profit for the bank or credit card company.

Another thing you can do is to try to build up your savings while you are paying down your debt(s).  This way you won't be going back into debt in case something happens.  Even if you can only put a tiny bit into savings, every little bit adds up and will get you one step closer to being debt free.  Good luck!

Do not declare banruptcy.  First off, you can not discharge student loan debt in bankruptcy, so it will only hurt your overall credit score and you will still be on the line for the student loan debt.  Bankruptcy is bankruptcy.  Even in a student loan consolidation, it is still student loans, but instead of having multiple payments, you would only have to send 1 check in to one company versus send in multiple checks.  There are two times that it is ok to go into debt, 1.  Investing in yourself, such as college and 2.  Investing in assets that help produce postivie cash flow. 

 What you need to do is get a plan.  Figure, the interest on your student loans is deductible and depending on your loan, you have 10 years to pay it back.  Creditors look at student loans differently, it's like a car loan, they know that most people finance their education and transportation. You need to show them that you will pay your debts and will do whatever it will take to get back your good name.   

 Ask yourself this question, do you think that you are going to make more than $60K in your lifetime?  If so, make the decision to pay your debts.  The small credit problems, will go away, if you make the decision to work on your credit.  But, if you declare bankruptcy, unless you have lots of unsecured credit card debt, it will not do you any good.  You will still have to pay the student loans back and you will have a bankruptcy on your credit history that will be there for the next 10 years.  This will make it harder to finance anything, including jobs and renting an apartment.  With so many people losing their house, lots of good quality apartments do not want to rent to people that have declared bankruptcy, why would they want to, it shows that you don't pay your bills.   

 I would start with a budget and then build yourself a debt repayment schedule.  Figure you know the amount that you need to pay back, not build a plan to either earn more, minimize your taxes and use the tax savings to reduce the debt and chip away at the underlying balance.  I paid off more debt than this while in college, working part-time.  I made the decision to improve my sales ability so that I was in control of how much I could make, every bit I used to pay down debt.  I learned how to reduce my taxes and use the refund to chip away at my debt.  If the goal is imporatant you, you will do whatever it takes to reach it.  Go get your first job, live within your means and if necessary get a second job at night and on the weekends.  Think what you credit will look like, if you worked on paying your bills.  Challenge the credit that was turned into collections, there are a lot of really good credit repair consultatnts that can show you how to improve your credit score.  Start a business and get a credit score for your company, while your repair your personal credit.

You need to build your plan, just like a college degree plan, you know what the end goal is, now break it up into how many years, then break it up into manageable steps and don't quit.  That is the main difference between those that are successful and those that are not, they made the decision not to quit. 

 Best of luck,

 Retirement Planning Texas

http://www.retirementplanningtexas.com