<prompt> Human: My wife and I are recently married. The in-laws stopped by the house last night and dropped off some letters that shed accrued since she moved in a few years ago. Things like her National Geographic subscription that she never changed the address on, etc.And 2 letters from the Dept. of Education which, roughly translated, stated Hey, you owe us 25k for your student loans. You havent paid us. Ever. Pay up or else.We have 10k in our OH SHIT! emergency funds.We currently have 20k left to pay on our 60k mortgage.We have no other debts, and my Credit score looks phenomenal. We havent looked at hers yet. Were honestly a little afraid to know just how bad it is. Well be doing a full audit of her debts ASAP to make sure theres not something else lurking in the shadows.I have a job which brings in 500 in income per month which is not already being spent on billsfoodetc. My wife is unemployed, and is not likely to be employed in any significant capacity anytime soon I will refrain from my the way we handle health issues in this country is bullshit rant.I immediately called the collection agency in charge of our debt, and after they gathered some numbers about our income and our monthly budget, they offered me 3 options. The first option, was to Settle with the state. Theyd knock 5k off the asking price, and Id have to give them the remaining 20k immediately within 90 days The second option, was we could Rehabilitate the loan. There were a whole bunch of caveats, but after listening to the agent and reading This website It basically boils down to Pay us 400 every month for the next 10 months, and well remove all the bad things from your credit history since you went into default, and act like this default thing never happened. And then you can go back to making payments on your loan like every other broke college student. The third option sucks and is just pay us whatever you can afford to pay per month. Repeat till the debt is paid off or you die. The latter is more likely. Even the debt collection agent told me that it was a terrible plan and I shouldnt choose it. My bank offers a program where we can take out a loan against our house Even while the mortgage is still on it Equal to 90 of the houses worth minus what I still owe on the mortgage So I can raise 20k and pay off the loan in its entirety, consolidating it back at my Bank. The interest rates for that look much nicer than the rates the loan currently sits at... 4.5 Vs. the 6 of the loans.The thing that concerns me, however, is that paying the entire thing off at once does not include the nice We tell the credit reporting agencies to ignore the fact that you defaulted Thing that rehabilitation does. SO my options, as I see it, are Go to my bank, take out a 10-20k loan, Pay off her student debts now. This saves 5k immediately, and saves significantly more money in the long term thanks to a lower interest rate Pay them for 9-10 months till they expunge bad things from my wifes credit history, and THEN move the loan over to my bank, costing me money in the long term but repairing my wifes credit.Im not too terribly concerned about my own Credit score... Since the whole debt and default thing happened before we were married it shouldnt really affect me. But I also dont want to screw my wifes financial situation up. Thatd be bad, both in a Her finances are tied to mine from here on in sense, and a I Like this person and dont want her life to be suffering Sense.I plan on meeting with my bank tomorrow to discuss exactly how they can help me with this situation, and to see if they With their greater financial knowledge can come up with any better ideas than I did about how to consolidate our debt into a nice easily paid off package.The crux of my question to you, Reddit, is Just how bad is this bad credit? Is it worth the 5k Dollars to try and get that default record expunged? Its not going to do anything for the missed payments which caused the default in the first place, so I dont even know if itll help.This whole situation has been a roller coaster of emotions. I apologize if I wasnt clear anywhere... I just... Dont really know what to do and am trying to make something work here. I appreciate any advice, no matter how basic.  <response>: If your wife is disabled sometimes student loans can be discharged. Honestly if she never plans on working why did you get married? She would have a lot more resources available as an independent. 