Loans consolidated under private company - life ruined?

Edwards Finance > Refinance

Q. In 1996 after graduation, I consolidated my student loans, and one credit card (with school expenses - equipment essential to my education) under a private company (Merlin-Plato). The original amount was around $35,000. To make a long story short, I have paid (conservatively) around $20,000 on the entire loan, but still have $30,000 remaining. I realized much too late that I made a horrible mistake, but it seemed like the right thing to do at the time. I am paying an obscene 6-6.5% above prime, and I shall never be able to pay this loan off at the current rate. I have had only one 6 month forbearance due to financial difficulty, but diligently made payments of $300-375.00/mo every other time, even while dirt poor. I know now if I had kept the original loans, or used a government consolidation program (I was not aware of this at the time!), I would have half of this amount paid off, and it's made me quite depressed (part of the reason I am under psychiatric care/meds). I am now contemplating Chapter 13. Yes, I am ashamed of having to to this, and actually looked forward to paying off my student loans, to prove I can indeed do this, and to show that non-trust fund kids have a fighting chance of financing a good school. I wish I had another choice, but everyone I've spoken to is stumped. My mom has even tried to take out a second mortgage to pay the loan, and I would have paid her, but the rates were too high (I cried when she told me this). I worked with an organization called MyVesta.org, and they couldn't negotiate a rate reduction with the company. I'm at the end of the rope. There was also an incident that pushed me over the edge; a collections person mistakenly called my mom (the cosigner) when my loan was not in collections. He then proceeded to insult and patronize her. I did call back and raise hell, but received no formal apology. I don't know what else to do. As of now, I'm told my loan is no longer a student loan, but "private." Obviously, it will be a cold day in Hell before I can refinance this with an unsecured loan (I live in New York City, so of course I don't own a car or home). I know I can't be the only one in this situation, but I know of no one who consolidated with this company after graduation, so I have no one with which to compare notes. I would really rather not have to file Chapter 13, and heartily welcome any advice or similar stories. Another note: I also have a hefty IRS debt, left over from a few years back when I had a choice of either paying the IRS or the loan company. I am working from home at this time, so I do have time and energy for any "creative" solutions.

A. -If I were in your situation, I would investigate whether your consolidator has in fact paid off the loan[s], or is currently paying the loans out of your remittances. If the latter, can you perhaps work out a deal to get the consolidator off your case? -Not to give you anymore bad news, but I'm not sure you could Chapter 13 because your mom co-signed the loan. I think she would have to chapter 13 as well. I'm not positive of this, though, and would like one of the lawyers who read this newsgroup to reply. Also, since you were able to consolidate your credit card debt into the loan, is this still considered a student loan and therefore not likely to be discharged under chapter seven, or if both you and your mom filed Chapter seven could it be discharged?

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