US Loan Repayments

Folks:

I have a problem.  I think it may be a big problem.  I'm a UK national who has been in the US for about 7 years - 3 years of law school and 4 years of legal practice.  In all that time I have been unable to secure US citizenship and face the very real prospect of having to return to London in the near future.  The problem is this - I have US law school debt, exactly $97,525.46 worth.  My monthly minimum payments are $1,075.00.  That's a fully consolidated loan (now w/ one lender) at a fixed rate of 3.5%.  My current salary in the US is $45,000/year.  Since I am not a corporate big firm attorney (I've been working on a commission basis for a solo practitioner for the past 4 yrs, doing "general" law) I am unlikely to secure employment in the UK with any of the larger UK firms, or US firms which are based there.  Basically, I am looking at salaries in the 18,000-24,000 UKP region, at least to begin with, since I have absolutely no UK legal experience.

According to the UK salary/tax calculator, that will enable me to bring home (net) about 1,400 UKP per month.  My minimum loan repayments equal about 650 UKP per month.  That leaves me about 750 UKP per month to live on, and I will be living in greater London (that's where my family are and where I grew up). 

I've already asked about a 5 to 10 year or so deferral on my loans so as to enable me to catch-up salary wise to where I'm in a position to comfortable repay my debts, but the lender isn't interested. I've already has one 6 mth deferral when I was experiencing financial difficulty.

Has anyone been in a similar situation.  Should I just not tell them (at least for now) that I'm moving overseas.  How long would it take them to find out?

Also, the loan is a private (not federally subsidized) loan, so I'm thinking bankruptcy.  Does US bankruptcy have any effects in the UK?  I hear that UK lenders etc don't have access to or don't use US credit reports/scores.  I'd rather pay back the debt, but realistically I need a salary in the 30,000-40,000 UKP region to comfortably do this in London, and I think that will take at least 3 or 4 years to accomplish.

Student loans cannot be written off due to bankruptcy, subsidised or not.  There was a thread here not long ago about skipping out on UK debt, which you said you weren't planning on doing.  Just be careful because you won't get advice about doing something illegal (not you specifically, anyone in general).  If you intend to repay the debt, you must inform your lender that you're leaving the US.  Knowing your income, they may lower your payments or be willing to work with you. 

Good luck.

Student loans cannot be written off due to bankruptcy, subsidised or not.  There was a thread here not long ago about skipping out on UK debt, which you said you weren't planning on doing.  Just be careful because you won't get advice about doing something illegal (not you specifically, anyone in general).  If you intend to repay the debt, you must inform your lender that you're leaving the US.  Knowing your income, they may lower your payments or be willing to work with you. 

Good luck.

I'm not a debt/credit lawyer, but I know that not paying your debts because you cannot afford to is not either morally wrong nor illegal.  The "debtor's jail" was abolished a long time ago.

I've already spoken to the lender - they are unwilling to budge.  In fact, they sent me a rather rude letter stating that it was inconceivable to them, and that they had never come across or even heard of a lawyer 4 yrs out of a top law school who couldn't earn at least $70,000 a year at the low end of the profession.  I replied, stating that my visa situation mandated a return to the UK where salaries are much lower, and they replied and told me (as if I had some choice here) that considering my law school debt level that it was imperative that I get a job at one of the many US firms in London which tend to pay circa 70,000-100,000 UKP for US lawyers with a few years experience.  While this is indeed true, it is very unrealistic given my background and education.
I'm being very candid with them.  I am by no means a high calibre lawyer and I lack meaningful experience and quality transferable skills. 

Is there some other means of debt consolidation or deferral open, perhaps by UK lenders who are willing to take over a US debt owed by a UK citizen who will be living and working in the UK?

I'm not a debt/credit lawyer, but I know that not paying your debts because you cannot afford to is not either morally wrong nor illegal.  The "debtor's jail" was abolished a long time ago.

Not trying to be argumentative but I believe not paying one's debts is morally wrong.  That's just my 2p though.  And my reference to illegal activity wasn't about you but about the other thread I mentioned. 

I don't know about debt consolidators in the UK but it sounds like you're in a bit of a dilemma.  Is there anyway you can stay on in the US?  or live with family when you return to the UK?  I have student loan debt too so I know what a burden it can be. 

No, no, no.

You've got a LOT of law firms over here you can apply to that would like someone with your credentials.  I can give you at least ten off the top of my head right now, and a bunch I can pass to you off-line.  Clifford Chance, White & Case, Baker MacKenzie, all the big firms have offices here in London and hiring you as a local hire is much cheaper for them than hiring US attorneys on an expat programme.  You need to start you legwork now to get you foot in the door. 

They DO hound you over here once they find out where you are.  Keep your consolidation loan as up to date as possible at all times. 

If you live at home with mumsie and pops, you shouldn't have any problem keeping your personal spending down.  Visit http://www.cheapskatemonthly.com/ for plenty of cheap livin' tips.

Not paying your debts IS morally wrong within the Western ethos in which you were raised.  You are confusing the pardoning of debt for currently fashionable reasons with moral acceptance.  It's not.  The debt law regime under which we have operated only in the most recent 75 or so years of Western Civ was created to release spouses and children from the financially crushing debts of their deceased relatives.  Before then, if you croaked, your parents would have had to pay off this debt.  Now, if you croak, they don't. 

The legislation evolved until the point where there was no longer a social stigma from bankruptcy; to combat that, recent legislation passed in 2005 has made it so that you will be unlikely to erase this debt by filing for bankruptcy.

Should I just not tell them (at least for now) that I'm moving overseas.  How long would it take them to find out?

What would not telling them that you're moving overseas accomplish?  Just curious why you wanted to do that.

I'm not a debt/credit lawyer, but I know that not paying your debts because you cannot afford to is not either morally wrong nor illegal. 

Not trying to force my own morals onto you, but i do believe that it is immoral to skip out on paying your debts.  It's theft.
I reckon it's illegal as well, cos when you took out the loan(s), you signed a credit agreement... a legal contract... to say that you would repay the money.

If you live at home with mumsie and pops, you shouldn't have any problem keeping your personal spending down.  Visit http://www.cheapskatemonthly.com/ for plenty of cheap livin' tips.

Who's to say Mum and Dad have space?  It's at a real premium here w/sky-high house prices and I can't see us ever being in the position to take on Little Johnnie b/c he has student loans.  We'll have to rent a one-bed as soon as both kids are adult so we can afford to save something for our elder care when we get too infirm to work.

Why should parents supply rent-free or subsidised housing to adult children?

Sorry, but I think imposing oneself on Mum and Dad as an adult is morally wrong unless you're homeless.

Look, tenth, if you're unemployed, you're unemployed.  File for forebearance if you are and get a job.

I had a bankrupcy from medical debt when I had no insurance - was working a temp job - and had NO assets - was using one of my boyfriend's cars and living in a rented studio apartment.  I'd been unemployed in dot.bomb and had other debts related to having to eat and pay rent.

I don't see the 'shame' in it if you honestly are just stony skint and got in a bad way and are doing your best to get yourself out of it, but it's just not enough.  It's there for a reason.

That being said, I also didn't have any more student loan debt, either.  I'd used a divorce settlement to pay it off. 

You made the decision to go to law school and gain an advanced degree that makes you more marketable than the majority of people.  You now have the responsibility to pay for that education.  No one forced you to do that, you made a decision.

I assume you knew the risks going into law school: Not everyone graduates first in their class and secures mega high salaries, you are not gauranteed the right to stay in the US and work, the UK has a different legal system which requires different qualifications to command a high salary.

That said, you are clearly intelligent if you managed to finish an advance degree, so what makes it impossible for you to find a decent paying job or work 2 jobs and really scrimp to pay off the debt.  It sounds a bit like you are trying to make excuses for yourself.  You have already resigned to not being able to get a good job back in the UK.  Maybe a change of attitude is all you need and possibly a long hard job search.

Bankruptcy laws changed last October and you just can't file for a Chapter 7 "clean break" bankruptcy anymore. If you have any income and can pay at least $100 a month, you will be placed into Chapter 13 (5 yr repayment) whether you want to be or not. Along with the "forced" Chapter 13, you will also have to attend credit counseling and attend a financial management class before you are even allowed to file. Since the majority of tenthplanet's debt are student loans, both those options are closed because you can not file bankruptcy on student loans anymore (doesn't matter whether they are private or federal). I've been through bankruptcy before the laws and couldn't discharge my student loans then either. Talk with your lender about getting a forebearance or reduced payment plan.

I disagree that it's morally wrong to live with Mum and Dad.  Our modern western culture is one of the few that are like this, and it was certainly the norm in our culture 100 years ago. 

It is foolhardy to think of ourselves as solo micro-economic units; when parents die, they generally leave everything to their kids.  Finding ways to increase your parents wealth eventually increases yours.  Your real family economic unit spans from your living grandparents down to their youngest living great grandchild.  If any link in the chain does well, they all do well.  And if any link in the chain is a drain on the unit, methods need to be in place to stanch the flow.  One of those methods that works both ways is sharing household expenses.

A kidult needn't be living at his or her parent's house rent-free in order for it to be cost effective to the multigenerational family economic unit.  The average parents of an adult child have a lower cost of running their (owned by them and much lived in) household than a London flat.  If the kid pays 1/3rd of the costs of running the household, the parents save money and the kidult ALSO saves money.  Paying rent is pissing capital in the wind.  It simply makes economic sense to keep the kid's hard-earned money within the larger family economic unit then let it go to an outsider (landlord).

Ever read Paul Fussell?  His "Class : A Guide Through the American Status System" is the most read reference book on the subject.  It's an eyeopener to read and realise how much class influences whether or not we find adult children moving back in with their parents repugnant or wonderful.

I disagree that it's morally wrong to live with Mum and Dad.  Our modern western culture is one of the few that are like this, and it was certainly the norm in our culture 100 years ago. 

A lot of things were the norm in our culture 100 years ago that aren't now.

I love my kids, but personally, I'm bringing them up to be responsible for themselves, b/c the fact is that in today's economy, I will not be able to afford to help them financially in adulthood - as many, many families won't - and certainly won't have the space to put them up.  Don't see where the notion that one is obligated to do so originated, but it certainly isn't one I adhere to. 

I hope my parents blow every single penny of their hard-earned money on themselves before they die - their kids are certainly encouraging them to do so!  - they've earned a rest and their space as well. 

TBH, I think I'd rather eat chilli beans and drink water before living at home again. 

It's less about class and more about space, IMO, just pure practicality these days w/houses being as dear as they are.  Most people lived crammed on top of each other in this town and many older adults downsize to smaller places as soon as they find the stairs difficult.

One just cannot assume that living w/one's parents is an automatic option nowadays - I mean, look at us on the this board, all living thousands of miles away from our parents.

I've not read Paul Fissell and probably won't b/c I have on interest in the American status system, having left for good myself.

I agree with Lizzit - I don't think there's anything wrong with living with Mom and Dad but there should be a good reason as to why the child is not living on his/her own.  It is a very western thing that it is 'shameful' to be living with your parents and in many eastern cultures this is not the case at all.  You can still be independent, an earner, and a contributor to society but still live with your parents. 

I agree with Lizzit - I don't think there's anything wrong with living with Mom and Dad but there should be a good reason as to why the child is not living on his/her own.  It is a very western thing that it is 'shameful' to be living with your parents and in many eastern cultures this is not the case at all.  You can still be independent, an earner, and a contributor to society but still live with your parents. 

I don't think it has anything to do w/class, though.  My dad was born to nothing and was extremely successful in his financial life.  They have a big bungalow.  I still wouldn't go back to living at home, however.  Just me as a person, and I'm Hispanic where it's common for adults to live at home - my sister did till she got married at 25.

It's not an option for me.  I haven't lived there since I was 18 and I would feel I was imposing. 

On a grand scale, however, I don't think you can say, 'Well, go live w/your mum and dad' b/c a lot of people now don't have the space and/or the kid's living in another city or country, even.

I too would feel like I'm imposing but that's me also - not necessarily the way it always is.  I wouldn't mind if my son/daughter moved back home with me even if he/she was working, earning, etc.  I think it's a personal thing and you have to evaluate the situation before saying 'it's wrong' or 'it's fine'.