Key Alternative Loan & Bankruptcy?
 

I signed a loan for $100,000 to spend a year at a big-name flight training academy. I graduated, and then was immediately hired as a professional pilot, but worked for slightly better than pennies. Three years later I'm in my first year as a CRJ F/O, also for pennies, and am absolutely financially destitute. I have no assests (my 11 year old car barely runs) and I can't make the minimum monthly payments on my Key Alternative Loan. They are larger than my entire monthly salary! I've tried for months, to no avail, to negotiate with the surly folks. Each time I nearly end up in tears. They keep tacking on "late fees" and trashing my credit, which was once squeaky clean. I never intended to default on this loan, and if they'd quit increasing the balance and work with me on a payment schedule that's actually feasible, I'd be happy to hold up my end of the agreement. Unfortunatly that's not the case.

So, I met with a bankruptcy attorney who thinks that a Chapter 7 would suit me well. I make so little now that I qualify, even since the laws got more stringent last fall. But he's not sure this particular loan is dischargable.

Has anyone had any experience with bankruptcy and the Key Alternative Loan? Have you tried to get it discharged? And if so, were you successful? Was there much litigation involved? Would you mind telling me of your exprience? My attorney would like to speak with any other attorneys who've been successful in getting this loan discharged and getting Key Bank off my back.

Thanks for your help,
RJGirl

I wish I could help you. I am going through the same problem, with the exception of I have no job. The last airline I flew for went belly up. Are you going through Great Lakes by chance?

Key Alternative Loan
 

Yes, Great Lakes is servicing my loan. They hassle me up to 3 times a day, and start calling around 0730. I've tried and tried to get them to negotiate a plan that would work, but they're being belligerent about it. It seems to do no good to return their calls....

Have you spoken with an attorney yet?

They should help you work out a payment plan that grows as your wage increases. Another idea if they wont let you do that is to enrol as a full time student taking classes. I know it sounds crazy but alot of my friends have posponed their loans by going to school longer. This will only work if you are a full time student and also if the loan is an education loan. Keep in mind you can take classes online for cheap and still be considered a full time student. I dont know if this will help you but its worth a try.

Yeah they're calling me too anywhere from 0800ish to 2045ish. Mostly Unknown and either an 800 or 888 number on the caller ID. I got fed up with talking to them. No matter what you say to them they never type anything into the computer, and always seem to "forget" an arrangement you made with them.

I tried enrolling back into school, but because I have so much out on this loan, I can't get anymore to go back.

Oh, and no I have not spoken to an attorney yet. Trying to avoid that. (I hate lawyers)

RJ, who do you fly for? Or you can email me [email protected]. I have a lot of questions for you.

Why
 

Why did you guys think that getting a loan for flight training was a good idea in the first place? I am not trying to criticize but am curious to the thought process. In addition what chance do you think there is to have a normal financial life if either after bankruptcy or by attempting to carry the loan? It seems to me that even under the best of circumstances it would take decades to erase a 100K loan at pilot wages.

SkyHigh

SkyHigh,

The last thing that these folks need right now is your holier then thou, "you should have/shouldn't have" attitude. The fact of the matter is good or bad, they did and now their asking for help in resolving this matter. Your post does nothing in this regard. Unless you have something advice to add on how they might resolve the situation, why not go start a different thread about how terrible it is to take out loans to get education towards a dying career or some other topic along those lines?

As for the two of you that are having difficulties, before you talk bankruptcy which will have very adverse effects for 7 years (although it wont completely kill your chances of credit, it will definately hurt you ability to get any loans at any reasonable interest rate), consider having your lawyer call these people on your behalf.

Your lawyer is an independent party that has no reason to get emotional and can stand relatively firm ground. Additionally the lawyer can help assist in persuading the company from constantly hassling you at all hours of the day. They will also likely have some added weight should you decide to use a bankruptcy arguement in trying to negotiate a reasonable payment plan.

Good luck, that's not a situation that's fun to be in by any means.

My Reasons
 

Josh,

It is important to me to know why people still think this is a good idea. I empathise with them and am sorry for their situation but something convinced them that a loan would be a good choice.

By nature I am half pilot and half business man. To me is seems highly unlikely that a career as a pilot would be unable to overcome the inertia of a 100K loan. My guess is that the lender is banking on getting a job at SWA within a year or two after signing. To me the only option is to get a real job and pay the debt off before returning to a life on continued poverty. Like one poster mentioned the interest and charges will climb faster than the pay will. I have a friend who got a school loan from ERU in the late 80's and is still 85K in debt. The good news is that at 45 he finally got hired at SWA last fall.

Skyhigh