Paying for ATP or any other flight school

[tiredofshoveling]

Hi all,

I haven't found much on how to pay for flight school on this website, (probably just haven't found it). I know that student loans are generally available if you have good credit which I do. I was thinking of taking out some kind of home equity loan if possible. I'll be borrowing the entire costs, 55k so I thought, hey if I don't make it I'd declare bankruptcy and go back to my old career. I don't anticipate this happening but its best to be prepared for something like this as there is always the possibility that things wont work out. I'd have to iron out the specifics, maybe speak with an attorney before I make any moves. I'm pretty sure that you cant get rid of student debt if you declare bankruptcy thus the home equity route. Maybe I could set up some kind of training LLC and borrow the money in the LLC's name, just in case. I hope this doesn't sound unethical, but I don't want to be shackled with endless debt with no way of paying it off. This is essentially a business risk imo and should be treated as such as any corporation would. If anyone has any ideas please let me know. I think I have about 55k in equity in my house at the moment, and about 30k in the bank.

thanks

TOS

[N826AW]

Originally Posted by tiredofshoveling

Hi all,

I haven't found much on how to pay for flight school on this website, (probably just haven't found it). I know that student loans are generally available if you have good credit which I do. I was thinking of taking out some kind of home equity loan if possible. I'll be borrowing the entire costs, 55k so I thought, hey if I don't make it I'd declare bankruptcy and go back to my old career. I don't anticipate this happening but its best to be prepared for something like this as there is always the possibility that things wont work out. I'd have to iron out the specifics, maybe speak with an attorney before I make any moves. I'm pretty sure that you cant get rid of student debt if you declare bankruptcy thus the home equity route. Maybe I could set up some kind of training LLC and borrow the money in the LLC's name, just in case. I hope this doesn't sound unethical, but I don't want to be shackled with endless debt with no way of paying it off. This is essentially a business risk imo and should be treated as such as any corporation would. If anyone has any ideas please let me know. I think I have about 55k in equity in my house at the moment, and about 30k in the bank.

thanks

TOS

You will most likely have to personally guarantee a loan for a new LLC. Which will destroy both the business' credit and yours once you try to BK the loan.

My suggestion if you are hellbent on going to ATP is to take out the loan, get your ratings, then go back to your better paying job and pay the loan off. Then pursue a career in aviation. You get your ratings at today's costs and don't have the burden of a $55k loan while making $18k gross per year.

[SpiraMirabilis]

Better interest rate on a equity LOC, anyway. But then they take your house if you can't pay

[DenverPilot8]

If claiming bankrupcy is even on the table then I wouldn't take out a loan in the first place. Like you said it's better to be prepared.

[tiredofshoveling]

I think now is the time to do it (flight training) so I'm going to take a loan since I don't have all the cash at the moment. I am a responsible person. Bankruptcy would suck but it better than having a 60k loan out at 12% interest and no possibility of paying it back, watching the amount owed go up and up. Bankruptcy ruins your credit for 7 years but if I'm not in a position to make payments on the loan then I won't be in any position to need credit, buying a house etc. I already own one anyway. I'm approaching this as a business venture although I don't think I will ever need to declare bankruptcy, the responsible thing to do is to plan for it just in case. I'd rather be debt free with no credit and broke than debt loaded and broke with no need of credit, thats just the way it see it.

Maybe the LLC idea is not the right way to go about it, again I gotta check with an attorney. Any advice would be appreciated.

thanks for the tips

TOS

PS denverpilot ill be doing my interview on Dec 1 in Phoenix so maybe we'll be starting at the same time..

Also aren't you working on your instrument written? you should do your instrument instructor test at the same time since its the same questions. That way you kill 2 birds with one stone

[MSUDAWG]

Originally Posted by tiredofshoveling

I think now is the time to do it (flight training) so I'm going to take a loan since I don't have all the cash at the moment. I am a responsible person. Bankruptcy would suck but it better than having a 60k loan out at 12% interest and no possibility of paying it back, watching the amount owed go up and up. Bankruptcy ruins your credit for 7 years but if I'm not in a position to make payments on the loan then I won't be in any position to need credit, buying a house etc. I already own one anyway. I'm approaching this as a business venture although I don't think I will ever need to declare bankruptcy, the responsible thing to do is to plan for it just in case. I'd rather be debt free with no credit and broke than debt loaded and broke with no need of credit, thats just the way it see it.

Maybe the LLC idea is not the right way to go about it, again I gotta check with an attorney. Any advice would be appreciated.

thanks for the tips

TOS

PS denverpilot ill be doing my interview on Dec 1 in Phoenix so maybe we'll be starting at the same time..

Also aren't you working on your instrument written? you should do your instrument instructor test at the same time since its the same questions. That way you kill 2 birds with one stone

You are the exact reason why interest rates are what they are......Planning on borrowing money you cant or dont want to pay back....Am I understanding this right?

[DenverPilot8]

I've saved 15k in cash so far. I have paid my car payment 5 months in advance now so I don't have to make a payment whille I'm in the 90 day program. I have added 3k to my retirement IRA this year to make up for at least some of the money I will not be able to contribute while in the first few years in the airlines. I also rented my condo (Owner) on a 1 year lease to conver mortgage exprenses while in training. I start the program on March 3rd. I'm hoping that I've done what needs to be done to be as preparred as I can. Not to say that I'm better than anyone for doing these things but when looking at the financials I decided there was no way I could make this happen unless I waited and took care of business before I go for flight training. Honestly if you think banrupcy is an option then I wouldn't do it. It's not only your credit that suffers but legally they will seize all of your assets that are worth a cash value to pay your creditors. You will be left with nothing of value. Even renting an apartment will be more difficult as a lot of places check your credit score before letting you sign a lease.

[N826AW]

So let me get this straight, your plan is to stiff the bank that loaned you money so you can get ahead? Not only is that the reason for higher interest rates, but it's the reason for the higher TD rate.

I've seen a few people apply for auto loans that have filed for bankruptcy and not many of them were successful in including their student loans in the Chapter 11 filing. In one case the bank sued the customer for failure to pay. The bank was successful in garnishing the customer's wages and was allowed to garnish to cover both the cost of the loan, as well as legal fees the bank incurred.

[skinswin34]

Tiredofshoveling,

My advice: Keep shoveling

[Customx]

I really hope this guy isn't serious.

Check out some of my old posts about how you can SAVE $40-60,000 in two years by working in South Korea. Have fun paying that loan back for 10-20 years, when you could have worked hard for 2 years and paid for almost all your training in cash.

[MikeOH58]

In the words of Larry David........."ARE YOU FVCKING NUTS"?

Seriously...

I bet a lot of people find you trustworthy.

[moxiepilot]

TOS: If you can't afford to pay the loan then you shouldn't be taking the loan out.

I'm not sure what the rush is to get it done now. The industry isn't going anywhere. Since you've already saved 15k, take some more time to save some more...

[Gumps]

Hmmm, Since taking out a loan you don't intend to pay is fraud, and there is evidence on line here, I'd say that even if your intentions are honest and you're looking at the "what if" scenario, I'd say you've got a better chance of going to jail than becoming an airline pilot should you default (for any reason).

I'm selling my home and investment property to pay for Super School. What good is property in one city if you don't know where you'll be domiciled anyway? I say liquidate, you'll cut your payment and be more flexible when you interview.

"The things you own will end up owning you."- Anon.

[DenverPilot8]

Originally Posted by moxiepilot

TOS: If you can't afford to pay the loan then you shouldn't be taking the loan out.

I'm not sure what the rush is to get it done now. The industry isn't going anywhere. Since you've already saved 15k, take some more time to save some more...

ah....I'm the one that saved 15k....

[NJT916]

IMHO: The worst idea since I bet money on the Ravens to win the Super Bowl this year.

Don't try and cheat the system, it's there for a reason.

[LoadMasterC141]

Dude, if there is even a notion in your mind that you will not be able to pay this debt off, then DONT DO IT!!! ATP is not the end all be all of aviation training. I too wanted to go to ATP and still believe it to be a good school, but I just could not stomach paying $120K for it (That is around what you will pay if you pay the loan to maturity).

I have heard your arguments for not going the FBO route or saving up, but if your only other choice is a good possibility of bankruptcy, I don't think that should even be an option.

I started my training in late April at a local FBO. I have 200 hours total time, 50 in a complex plane. So far it has cost me $13533. I use a 1.9% Mastercard to pay for my training, and then pay it off as fast as I can. Currently, it has a $4200 balance. It will be down to zero by the end of Feb and I will have 250TT+, 100 Complex, CSEL License. I will then take a loan out for Multi-Training and CFI school. I figure I'll be in the hole about $7k when I get done and total cost of training will be around $25-27K. Hanging around an FBO has gotten me alot of "Free time"; People looking for safety pilots or just rides somewhere for cost sharing.

I could have done it faster if I got more dedicated, but once I got into actually flying on the side, my current job has been tolerable for longer than I thought. Trust me, in April I was willing to do WHATEVER it took to get out of this job and get flying, until I decided to be a grown-up and pause to think about doing the right thing rather than let my emotions push impulsivity.

If had the money, I would have gone to ATP. But I did not.
So I have taken my time, done each step right, and saved more money.
Sure it has taken me longer than 5-6 months of school and instructing at ATP, but I don't have that loan, or scheme about banruptcy, screwing over my fellow Americans, just to "have it my way". Sad.

[tiredofshoveling]

Everyone,

First of all I never said I intended to declare bankruptcy. I intend on paying back my loan, slowly at first then more aggressively as I make more money as an airline pilot. Bankruptcy laws are intended to protect people from a disastrous financial situation, anyone who is prudent might want to consider that with 55k loan and a flight instructing job, or worse, if you were to loose your medical be hurt etc. you might not be able to pay it back. I resent being accused of intending to declare bankruptcy, I do not. Banks loan money that is sometimes not payed back, thats part of the cost of doing business for them. Obviously its not a bad racket and if they weren't making money they would quit. I have saved 30K and I have a 2 family which I'm gonna rent out my to my ex flight instructor at a cutrate deal so he can do the shoveling. I have about 55 in equity in my house. I would sell it if it wasn't about the worst time ever to sell. And as far as saving up more money to pay for school I'll leave you guys with a little quote.

A good plan, violently executed now, is better than a perfect plan next week. George S. Patton
US general (1885 - 1945)

Laters

TOS

[tiredofshoveling]

Btw interest rates are at about 30 year lows. And its not b/c people are paying back their loans aggressively, ever hear of something called the Fed?


TOS

[surreal1221]

Originally Posted by tiredofshoveling

Btw interest rates are at about 30 year lows. And its not b/c people are paying back their loans aggressively, ever hear of something called the Fed?


TOS

Not helping your argument.

[killbilly]

Originally Posted by tiredofshoveling

Everyone,


First of all I never said I intended to declare bankruptcy. I intend on paying back my loan, slowly at first then more aggressively as I make more money as an airline pilot. Bankruptcy laws are intended to protect people from a disastrous financial situation, anyone who is prudent might want to consider that with 55k loan and a flight instructing job, or worse, if you were to loose your medical be hurt etc. you might not be able to pay it back. I resent being accused of intending to declare bankruptcy, I do not. Banks loan money that is sometimes not payed back, thats part of the cost of doing business for them. Obviously its not a bad racket and if they weren't making money they would quit. I have saved 30K and I have a 2 family which I'm gonna rent out my to my ex flight instructor at a cutrate deal so he can do the shoveling. I have about 55 in equity in my house. I would sell it if it wasn't about the worst time ever to sell. And as far as saving up more money to pay for school I'll leave you guys with a little quote.

You may resent it, but I'd suggest you consider what you wrote again; I got the same impression others did - that you were looking for a way to get a loan and not pay it back.

Banks, and especially mortgage companies, are taking a huge beating right now because people are not paying back their loans aggressively - thus, the credit crunch. What's scarier is the people who are buying up the debt at cut-rate prices - they are going to make a killing on sheer volume.

As to your original point - the student-loan debt issue with bankruptcy, I believe, is only on government loans, not private career-training type loans - but I could be wrong about that.

And while I applaud your creativity (I considered the LLC thing for tax reasons) I don't think you're really looking at this as a business decision. If you were, you wouldn't consider changing careers in this manner. Let's be honest - the math says it would be stupid to walk away from a decent career if it would take you 5-7 years to get back to where you are.

Final thought....the house you've got with the equity is the one major asset you're likely to own that will appreciate over time. Taking equity out of it is what got thousands of people in the hole in the first place. I'm all for using your assets, but if you ever, say, lose your medical and can't fly anymore, you're not going to be able to get that equity back.

Good luck to you in your endeavors.

[Gulfstream IV]

Originally Posted by tiredofshoveling

Hi all,

I haven't found much on how to pay for flight school on this website, (probably just haven't found it). I know that student loans are generally available if you have good credit which I do. I was thinking of taking out some kind of home equity loan if possible. I'll be borrowing the entire costs, 55k so I thought, hey if I don't make it I'd declare bankruptcy and go back to my old career. I don't anticipate this happening but its best to be prepared for something like this as there is always the possibility that things wont work out. I'd have to iron out the specifics, maybe speak with an attorney before I make any moves. I'm pretty sure that you cant get rid of student debt if you declare bankruptcy thus the home equity route. Maybe I could set up some kind of training LLC and borrow the money in the LLC's name, just in case. I hope this doesn't sound unethical, but I don't want to be shackled with endless debt with no way of paying it off. This is essentially a business risk imo and should be treated as such as any corporation would. If anyone has any ideas please let me know. I think I have about 55k in equity in my house at the moment, and about 30k in the bank.

thanks

TOS

What you are planning to do is illegal and unethical. I happen to be a business banker in the DFW area for a huge bank and to borrow funds against your LLC or any business entity will require both industry specific experience and collateral to get the kind of loan you want. And I don't think you have neither. Needless to say, attorneys won't give you any kinda of advise to this effect. I know a few attorneys, so I know this well. Finally, you need to truly seek an experienced career/financial advisor to discuss your career goals. If you are getting into the flying business to fail, then think twice before you spend $55K. If you want to fly as a hobby, maybe get your PPL and see what you are capable of doing. But don't spend $55k and never get a return on your invest. Remember most people today in our great country don't even have $55K in retirement or savings, so don't just make $55k seem like small change. I work in banking and see this all of the time. Those who get into the flying business (pilots) do it because they love to fly and are willing to do everything to get where they need to be. Honestly, think really seriously before you spend $55K if flying is not what you want to do.

Good luck!

[moxiepilot]

I want to post a follow up thought...

How does bankruptcy affect obtaining a pilot job (let's say after CFI) in the regionals, cargo and corporate sectors?

[eastbayk]

1. We used a HELOC to pay for ATP in 2006. We ended up selling the house and now have no flight training debt. It worked well for us.

2. I know more than one pilot with a prior bankruptcy and it hasn't effected them at all. I can't remember for sure, but I don't recall signing a credit report consent form during the regional interview stage. I'm not sure they look at your credit. If one has a good history post bankruptcy, it will probably negate it.

K

[Direct-enter-enter]

Me I sell Bolexes on the corner, only 5400 of them to go!!
However, everyone is not the same, you might be into medical experiments, or maybe you have a great idea for three steps to toned abs, sell a dvd, get rich. . . whatever works