PLEASE ADVISE --- how to handle massive credit card debt

[BigRig]

While I am yet to check with the Bar in any state, this seems pretty tough, if not unfair, to regulate. I mean, with the prohibitive costs associated with making it to law school (let alone a good law school) in addition to the exoribitant (and rising) fees of attending, I think it is very reasonable that those from a "lower-income-no-silver-spoon-in-hand" could find themselves with a large amount of consumer debt to pay off. And by no means does this mean that he/she is more likely to engage in fraudulent activities as a result of holding their JD.  While statements made earlier regarding the likelihood of those who are irresponsible with consumer debt to feel pressure to use funds illegally might be logical to a degree, they are based on generalizations that are not able to support sound policy. Just because one graduates law school with a high/massive amount of consumer debt (again, this is an arbitrary label) does not mean he/she is irresponsible. In certain cases, credit cards may offer a better option (maybe the only option) than student/private loans to cover expenses incurred while in law school.

I don't think there is any question that having little to no consumer debt makes one's life much easier. Unfortunately, in today's world it's difficult to avoid for a lower-income person with little to no financial help seeking an professional degree (law, med, etc.). If such a policy exists, it better be very specific in its enforcement. At its root, this approach is discriminatory by favoring the well-to-do (stronger financial position out of the gate doesn't say anything about responsibility).

[queencruella]

The issue I take with this is that law schools tell you to get your finances in order before attending. No one has to go to law school straight out of undergrad, nor do people have to go to law school full-time.  There are plenty of options that make law school more affordable if you are willing to take them- like going part-time or taking a scholarship from a lesser ranked school. If someone goes to have their debt consolidated so that they can pay off the balances within 5 years, maybe that person needs to wait until that debt is paid off to continue his/her education or attend a part-time program that will allow him/her to work while in school.

[aerynn]

The issue I take with this is that law schools tell you to get your finances in order before attending. No one has to go to law school straight out of undergrad, nor do people have to go to law school full-time.  There are plenty of options that make law school more affordable if you are willing to take them- like going part-time or taking a scholarship from a lesser ranked school. If someone goes to have their debt consolidated so that they can pay off the balances within 5 years, maybe that person needs to wait until that debt is paid off to continue his/her education or attend a part-time program that will allow him/her to work while in school.

I agree. 
 

[BigRig]

This is a personal finance issue should not be for us/someone else to determine. Yes, if someone is trying to wrap consumer debt into educational loans to avoid paying them/get a lower rate/etc. you could have issue with that practice. However, if a student has consumer debt or chooses to use consumer debt to finance their way toward an advanced degree, he/she should not be denied admission (to law school or the Bar) based on that fact alone. If he/she files bankruptcy or has another serious legal issue related to debt, then there is a cause of action the Bar needs to address. Because someone has resorted to these debt instruments to attend the best school he/she can (telling someone to go to a lesser school because they have debt/can't afford it is discriminatory) is his/her choice.

[queencruella]

This is a personal finance issue should not be for us/someone else to determine. Yes, if someone is trying to wrap consumer debt into educational loans to avoid paying them/get a lower rate/etc. you could have issue with that practice. However, if a student has consumer debt or chooses to use consumer debt to finance their way toward an advanced degree, he/she should not be denied admission (to law school or the Bar) based on that fact alone. If he/she files bankruptcy or has another serious legal issue related to debt, then there is a cause of action the Bar needs to address. Because someone has resorted to these debt instruments to attend the best school he/she can (telling someone to go to a lesser school because they have debt/can't afford it is discriminatory) is his/her choice.

However, most law schools put disclaimers on their sites about needing to minimize consumer debt before coming to law school. State bar associations have also decided to make judgments based on those choices. The fact that it is a possibility that consumer debt can decrease your chances of entering the bar is a risk you accept when choosing to use consumer debt to finance law school.

[aerynn]

This is a personal finance issue should not be for us/someone else to determine. Yes, if someone is trying to wrap consumer debt into educational loans to avoid paying them/get a lower rate/etc. you could have issue with that practice. However, if a student has consumer debt or chooses to use consumer debt to finance their way toward an advanced degree, he/she should not be denied admission (to law school or the Bar) based on that fact alone. If he/she files bankruptcy or has another serious legal issue related to debt, then there is a cause of action the Bar needs to address. Because someone has resorted to these debt instruments to attend the best school he/she can (telling someone to go to a lesser school because they have debt/can't afford it is discriminatory) is his/her choice.

There are avenues other than consumer debt to finance an education.  Particularly if students are advised in advance that credit cards are not an appropriate way to finance an education.  You *can* go to a lower ranked school.  It isn't discriminatory, it is living within your means.  The state bar is not the United Way.

[BigRig]

Just spoke with the Florida Bar Board of Examiners and the only consumer debt element in their background check is related to account delinquency/bankruptcy/etc. This is as I suspected, yet realize Bar standards vary by state. If anyone finds a specific practice in another state that is different than this, please share as I am curious.

[aerynn]

http://www.abanet.org/legaled/publications/compguide2006/chart2.pdf

Look for an X in the "debt" column for states that have a debt portion to their character and fitness.

[BigRig]

Thanks! There is still no specific information as to what debt elements are examined and hence, acceptable/unacceptable. I imagine in most (if not all) cases the examination will pertain to delinquency and bankruptcy history rather than consumer debt levels during/prior to law school. Do lenders examine what portion of one's student loans is used to pay existing/new credit card debt? I am sure there is a way to prevent someone from transferring all of their debt to a student loan, but I believe you are able to make a payment toward this debt (not sure how large).

[val]

My two thoughts:

I know a guy who just graduated law school and the forces that be won't let him take the bar in GA because of too much debt (not sure how much it was, but $20K would probably be in the ballpark).  So, you'll want to check the state where you want to practice ahead of time.

Someone mentioned taking out additional private student loans to cover the $20K.  It's my understanding that you can only take out student loans up to the maximum budget allowed by your school, regardless of whether the loans are public or private.  If you want to take out more than the budget, your school has to raise your maximum.  Of course, $20K in debt may persuade your school to raise the maximum.  But then again, whoever said you can't use your student loans to pay off past debt may be right.  Definitely something to check on.

That's actually not true. You can take out private educaiton loans from a handful of lenders that do not require school certification (Chase Education One loans come to mind, but there was a list floating around on here a little while ago with more of them) and do not use 'cost of attendance minus financial aid received' to cap how much you can get. they have a maximum amount, yes, but i think Chase's was 40K.   http://www.educationone.com/foryou/graduate.html

These loans are pretty much separate from your financial aid, your school's Financial aid office has nothing to do with them and you can use them for any education/living expense you want. The rates are definitely not as good for these, but it's still worth a shot since they are most likely lower than the interest rates on your CCs and they are deferred just like any other student loan...