paying down a large amount of debt. tips? advice?

[rj.phila]

hello all, im wondering if you all have any wise tips for someone in my situation.

i am considering paying down my partners' debt. she has a bit over 100k in debt; about 85% of it is student loans(we considered her filing for bankruptcy, and she would be willing to do if it included student loans, but it wouldnt solve the student loan issue). the other 15% are credit cards related to school.

do you folks have any advice about this? are there any ways that we could reduce the amount owed? can the student loans, or credit cards, be bargained down? thanks for any advice.

[Seeker]

hello all, im wondering if you all have any wise tips for someone in my situation.

i am considering paying down my partners' debt. she has a bit over 100k in debt; about 85% of it is student loans(we considered her filing for bankruptcy, and she would be willing to do if it included student loans, but it wouldnt solve the student loan issue). the other 15% are credit cards related to school.

do you folks have any advice about this? are there any ways that we could reduce the amount owed? can the student loans, or credit cards, be bargained down? thanks for any advice.

Student debts:
Reduce the total amount owed? not likely.

Bargained down? also not likely, although if you are able to consolidate the loans, you may be able to get a lower overall (and potentially "fixed") interest rate.

Credit Card debts:
Bargained down? not unless you forego her credit rating and don't make payments on those CC debts.

You have two very different goals here; help her pay down and/or help her not do what she promised she would do: pay down what she borrowed in pursuit of her education.

A partnership is based on trust and mutually helping the other. Helping another do something other than what they set out to do originally just seems morally backward to me. A nice way to start a partnership (not)!

[disneysteve]

Why is she not able to pay back her loans?

[Seeker]

Look at Step 5 here:

How to Reduce Student Loan Debt

There are ways to qualify for loan forgiveness, but that depends on the type of loan and what she chooses to give (as far as services or time in exchange for partial debt forgiveness).

Also the advise given at the above link (above all the Steps on that page) for "Talking to a Professional" is always the best approach.

We do not and cannot know her loans and the potential options she may qualify for. Only the people near her, who have her records, and who understand the various options that apply to her personally, can properly advise her.

Your original posting sounded conflicted to me, like: I can help her pay, but I'd rather help her avoid. If I were the "her" in that situtaion, I might be a bit wary of trusting you knowing that you could help in a positive manner (by helping her pay), instead of helping her in a negative manner (by helping her avoid). While she may agree with your reasoning entirely... I'm afraid that I would not.

In spite of my feelings, the above link is a resource that may help you two, in whatever you decide to do.

[rj.phila]

Seeker: i understand your reticence to endorse this idea. im not wild about her having this large amount of debt. the bottom line is that she has a graduate degree in a field in which she can only afford to pay the minimum amount on her debts. she didnt set out to take on a debt and repay it. she set out to get a masters degree so she could contribute more to our household financially. we've been together for 9 years now; while she does not have(and was not raised with) the financial discipline that i have and was raised with, once you are in a relationship with someone, its hard to condemn them for something like that. maybe you can understand that, maybe you can't.

she could pay her loans off at this rate by the time she was in her 60's or so. as i am in a position to help her with this, its something i am considering. that's the bottom line.

of course there are other ramifications, relationship-wise, but im asking here about the actual financial protocol of the process, and if there are any ways to lighten the load of debt if we were to go ahead with this. thanks.

[Seeker]

rj.phila --

I don't condemn her.

I understand the both of you.

And I understand the system of education which begets a huge load of debt from today's students... the vast majority of which do not throuroughly understand the financial consequences of what they borrow today.

You are not alone, nor is she.

"she didnt set out to take on a debt and repay it. she set out to get a masters degree so she could contribute more to our household financially."

What if her intentions were different? What if she took on this debt to actually intend to better the world? To help others in a way that she could best accomplish that. In a social way? With a master's degree?

Maybe I'm wrong, but I could hope.

I do not condemn her at all.

-----

But what about about all the other tough situations people face? Those who suddenly take on huge debts because of sudden illness of their SO? Or a child of theirs?

Ultimately the world is not ideal; and nobody can make it so. The world operates on borrowing and repaying... on agreeing and keeping your word.

It operates based on the assumption that we each individually and as a whole, do the absolute best we can for ourselves and for our future and for the future of the ones we love or care about.

Help each other; do not help hurt each other.

[disneysteve]

she could pay her loans off at this rate by the time she was in her 60's or so.

Why is this? Why is she unable to repay her loans? Is she unemployed or underemployed for some reason? Is she overspending, living a lifestyle she can't afford? Did she simply over-borrow, getting a high priced education for a low paying career?

How much does she currently earn? What does her budget look like?

[rj.phila]

Did she simply over-borrow, getting a high priced education for a low paying career?

this is the case, in a nutshell. she works in the oncology dept of a childrens hospital now, so to answer your question Seeker, yes it WAS more than just to contribute to the household income. unfortunately, the job opportunities were alot worse than she expected coming out of grad school.

this is all ancillary, to me at least. whats done is done. AVOIDING the debt is not an option for me; that's basically what she is doing on her own accord(technically, paying the minimum amount), thus, i have been considering stepping in financially.

AnnaZ-i am in a position where i could pay down her debt. this is the option that i am considering, for the record; debt consolidation might decrease the interest rate, but it would still be a decades long process on her own, considering its over 100k.

thanks alot for you guys' advice. again, my initial question was intended to make sure i wasnt missing any options for reducing the amount of debt. AFAIK, the only way to get rid of student loans is to pay them, and wanted to make sure i wasnt missing anything there.

[disneysteve]

do you folks have any advice about this?

my initial question was intended to make sure i wasnt missing any options for reducing the amount of debt.

My advice is to list her income and expenses, figure out where she can trim spending, look for ways to boost income and find ways to repay her own debts. It is great that you are willing and able to help and that might be a part of the solution along with her doing her part. Can she pick up extra shifts? Can she get a part-time job elsewhere? Does she have anything she can sell? Does she have any bills that could be trimmed or eliminated like cell phone, cable TV, gym membership, personal care (hair, nails), etc.?

[Seeker]

There still may be options... you don't really provide the details.

Are her loans or any part of them "Federal loans"?

Read here: FinAid | Loans | Loan Forgiveness under legal and medical studies. Follow the links. Research.

She needs to check with her HR Department on what may be available for her as far as "loan forgivness".

She needs to check with the Finiance Aid Department at the college(s) she attended.

Another avenue as Disney Steve has been suggesting all along is the income/expenses route. List income and her expenses. This site can help in that regard.

But for the actual debts that apply to student loans, you need to figure out what kind of loans they are and what state and local avenues might be availbe to help her.... since she does indeed help so many others. We cannot really help in that regard because we do not know the specifics. We don't even know which state you reside in.

[cptacek]

This is your partner's debt. Is there a way to legally protect yourself if you pay off $100,000 of the other person's debt and you then break up?

[disneysteve]

This is your partner's debt. Is there a way to legally protect yourself if you pay off $100,000 of the other person's debt and you then break up?

Good question. I thought of this earlier. Personally, I wouldn't pay someone else's debt unless I was married to her (at which point it is no longer "her" debt but "our" debt).

I don't believe there is any legal protection in this case. It would be viewed as a gift. And remember, there are limits to how much you can gift another person each year. I think it is currently $13,000. Above that amount, there are tax implications. You can give as much as you want, but over the gift tax exclusion, she would need to file a gift tax return.