“I didn’t want this to be my life. I am 38 years old and have $ 208,000 in student loans. I do a job I hate for $ 47,000 a year. How can I get out of debt?

Question: I’m 38, I went to college, but since then I have struggled to find a career that I like. I now have over $ 208,000 in student loans, but I only earn $ 47,000 a year. I do a job I hate, I get up and hate everyday life. While I wanted to go to college, I didn’t want this to be my life – and unless you live it, you have no idea what that looks like. Debt overwhelms me: I must have filed for Chapter 13 bankruptcy years ago, then moved on to Chapter 7, because I lost my job and only had my husband’s income . I was able to get rid of $ 40,000 in credit card debt and some medical debt, but I was in default on my student loans. I will never be able to buy a house in my name, even if I have some savings. What should I do?

Having trouble paying off a student loan or other debt? Send an email to chill@marketwatch.com.

Responnse: The first thing to realize is that you are not the only one suffering from the mental health consequences of debt. In a recent Prudential survey of borrowers with debt of $ 5,000 or more, 42% said their student loan debt causes high levels of mental and emotional stress, even more than other types of debt. “Financial problems can cause depression and severe mental stress,” says Grace Yung, certified financial planner at Midtown Financial Group in Houston. “There is no shame in that … Consider talking to a [mental health] professional to help you find your spark and overcome your stress. When it comes to your finances, we asked experts what you – and other people with student loan debt – should consider doing, from loan rehabilitation to refinancing (see the lowest student loan refinance rates you may qualify for here), loan cancellation, income-based repayment plans and more.

In your case, let’s first discuss the fact that your loans are in arrears and what to do about it. Right now, collections on your past due loans, assuming you have federal loans, are likely on hold thanks to COVID-19 relief measures. (COVID-19 emergency assistance for federal student loans is scheduled to end on May 1, 2022.) And Mark Kantrowitz, author of Who graduated from college? Who doesn’t?, says it is worth considering whether you can rehabilitate these loans, which would remove the default from your credit history. “Many borrowers in default will be eligible for the rehabilitation of their defaulted loans,” he says. (If your loans remain in arrears after the collection pause ends, you may be subject to payday garnishment, tax refund withholding, and collections.)

Here’s how it works: “If a borrower makes 9 out of 10 consecutive, full, voluntary, reasonable and affordable monthly payments on a loan pardon agreement, their loans are rehabilitated and the default is erased from their credit history. This is a unique opportunity, so if the borrower defaults, he or she will no longer be able to rehabilitate the loans, ”says Kantrowitz. Note that suspended payments that occur during the COVID-19 relief period will likely count towards your nine required payments: “If you have not made or received credit for the nine required payments by the end of the suspension of payments, you must make the remaining payments to complete the rehabilitation of the loan, ”says the Ministry of Education here. Kantrowitz adds that if you, or someone else, pardons your loans, you should “either subscribe to an income-based repayment plan, which is often required as part of pardon, or get a deferment or a abstention if you are unemployed or in financial difficulty. “

To lower your monthly loan payments, an income-based repayment plan is worth considering because it bases your monthly payment on the amount of money you earn, so low-income people will have lower payments. . However, these are usually only an option with federal loans. “An added benefit of income-oriented repayment plans is that if the borrower’s loans fall under the Direct Consolidation Loan program and the borrower works full time in a qualifying public service job… the remaining debt will be. canceled after 10 years of payments. ”.

Next, it is important to stay up to date with your new loan payments, so it can help increase income or reduce expenses to help pay off debt. “Options for increasing income may include requesting a raise, overtime, or a part-time job in the evenings and weekends. You also have to consider selling things that haven’t been used for over a year, ”says Kantrowitz.

Finally, it is not impossible to reopen the bankruptcy case and request the release of student loans. “This will require an adversarial procedure [learn about these here] and the borrower will have to demonstrate undue hardship, which is a severe standard. But when the loan payments exceed the borrower’s income and the borrower has no reasonable prospect of increasing their income and has explored other options for dealing with the debt, the borrower may be successful in get a full or partial discharge of its student loans, ”says Kantrowitz.

Note that a bankruptcy settlement could have tax consequences: if a borrower obtains a student loan settlement from, for example, a Chapter 7 filing, the amount of the forgiven debt is treated as income by the IRS, but if the borrower is insolvent (total debts exceed total assets), the IRS can write off some or all of the tax debt, says Kantrowitz. “If the IRS doesn’t forgive the tax debt, there are other options. One is to negotiate an offer in compromise by filing IRS Form 656, ”says Kantrowitz. “The other is to request a payment plan of up to 6 years by filling out IRS Form 9465. Since the tax debt is less than the student loan debt that was forgiven, the payment plan may be. less heavy than student loan debt. “

While refinancing might not seem like the best option for you, as you seem to have Federal Student Loans and likely need an income-based repayment plan, they are an option for those struggling with. private student loans because the rates are very low right now. (Check Out the Lowest Student Loan Refinance Rates You May Qualify Here.)

* Questions edited for clarity and conciseness