Most people assume that all forms of debt are the same. Take out a loan when you need it and that’s it. Sign the dotted line and you can have whatever you want. Whether it’s a new home, a vehicle, or student loans for a college education, credit makes the world turn. The average person cannot afford to pay cash outright for those things.
The problem is, student loans are a different type of beast altogether. Many don’t fully understand what they’re getting themselves into. Young people go into it with the assumption that it’s worth the cost. Like consumer debt, the expectation is, when you borrow the money, you’ll pay it back.
If you can’t pay back traditional debt, people just ignore it and walk away. Yeah, it’ll go to collections and hurt their credit, but eventually, it goes away. You can declare bankruptcy if it gets really bad. The same isn’t true of student loans. If you take out a student loan, you’ll be a hunted animal until you pay it all back. There will be no escape.
To learn more about student loans and how you can overcome them, give Financial Helpers a call today. We’d love to talk with you about your options. You can reach us at:
Student Loans and Non-Payment
With normal loans, collateral is involved. If you don’t pay, the bank will repossess and get its property back. With student loans, there is no collateral. They will come after you to ensure payment. They’ll garnish your wages, pursue you relentlessly, and can even require legal action. It’s a never-ending cycle.
The worst part is, student loans never disappear. If you don’t pay them, you’ll go into default and that will permanently scar your record for life. In that case, you’ll most likely never get approved for a mortgage or car loan. Banks won’t trust you to pay back your loan if you’re in default.
Another key difference between regular debt and student loans is bankruptcy. If you get in over your head with other debt, bankruptcy is an option. It might hurt your credit for a while, but things often return to normal. You can’t do that with student loans. It’s extremely difficult to discharge student loans through bankruptcy. It’s not impossible, but fairly close.
Statute of Limitations
Most student loans are backed by the federal government. They’re handed out and dealt with by the Department of Education. There are also private loans given out by private companies, but those types are becoming fewer in recent years. This is important to know because many believe they can rely on the statute of limitations.
http://financialhelpers.com/outstanding-student-loan-debt-in-u-s-hits-new-record-high/
With most loans, it will disappear off your credit report after seven years. Federal student loans won’t. This was already touched on earlier, but these loans stick with you. It will not fall off your credit. While this is frustrating to those with student loans, there are protections available to those who qualify.
Debt Protections
The amount of student loan debt continues to climb. Monthly payments can nag someone for 10-20 years, depending on how much they have. Many millions of people are struggling under the intense burden of this crisis. So far, the amount of student loans has reached $1.53 trillion and climbing.
That’s why the government has created several repayment plans and even offers full student loan forgiveness. This is available for public service workers, such as nurses and teachers. To learn more about these programs, call Financial Helpers today at the number listed above.
