Q: Is there a loan out there that we can apply for even if we have filed for bankruptcy? Trying to get my child into college for the fall 2009 semester.
A: A parent's bankruptcy filing shouldn't impact a student's ability to get federal aid, said Mark Kantrowitz, publisher of FinAid.org, which tracks the college financial aid industry.
However, it will likely prevent Mom or Dad from getting a federal Parent PLUS loan. One of the requirements for that loan is that the parent didn't file for bankruptcy in the past five years.
If the parent is denied a Parent PLUS loan, the student becomes eligible for greater unsubsidized Stafford loan limits, Kantrowitz said.
Subsidized Stafford loans are awarded to lower-income students, and the government picks up interest payments while students are still in school. Students can take out unsubsidized Stafford loans regardless of income.
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If a student has declared bankruptcy, this generally won't affect his or her ability to get federal aid. Nor will it impact the ability of parents to get assistance. The exception is if there are any federal student loans that weren't dismissed by the bankruptcy court and are in default. In that case, the student probably couldn't get additional aid.
Beyond that, it might be tough getting a loan from a private lender given the tight credit market. If you've exhausted your federal aid options, the best bet is to contact the financial aid office at your teenager's college.
Q: I owe about $7,000 on credit cards, and I'm trying to pay them off, but the interest rates keep going up. One jumped to 29 percent after a payment was only a day late. I got a call about getting my rates lowered, supposedly through some government program, but I don't trust them. Is there a legitimate government program to consolidate debt and lower interest rates? If not, is there any way to get the bank to work with me?
A: You are right to be suspicious about that call. There is no government program to consolidate credit card debt or lower interest rates. Any call like this is probably a scam.
You may, however, be able to get your bank to lower the rate on your card with a simple phone call, particularly if you have only one late payment.
"I always advise to call the issuer and see if she can negotiate to get the rate back down," says Gail Cunningham of the National Foundation for Credit Counseling. And be polite, but persistent. Ask to speak to a supervisor if you get a "no" at first. "If you don't like what the person on the phone answers, work your way up the chain to the decision maker."