Understand Your Options with Student Loan Collections!
I cannot tell you how many times I’ve looked at someone’s credit bureau and it was perfect. Except for one thing – Student Loan Collections!
There are many people that are haunted by past and present student loans. It’s no surprise. What other loan do you take out when you don’t have a job or other means of repaying the loan?
If you are just now falling behind on your loans, the best thing is communication. There are many options you may have that can help you avoid defaulting on your loan.
The first is a deferment. If you qualify, your loans can be deferred for a set period of time. During this time, no interest will accumulate. Qualification for deferment include: going back to school, becoming unemployed or other financial hardship.
If you don’t qualify for deferment, you may be able to go into forbearance. Interest will still accrue, but forbearance can help you eliminate or reduce your payment for a period of time.
Another option if you are just getting out of school is graduated payments. This is where you payment is lower the first few years and then goes up later. The down side to this is that interest will continue to accrue, so you will pay more over the life of the loan.
If your student loans are already in collections, you know how ugly it can get. Unfortunately, the government hires private agencies (paid on commission no less) to collect student loans. These collectors can sometimes be quite abusive, and will even misrepresent themselves as the government.
Here are some key facts you need to know:
- Most student loans are not dischargeable in a bankruptcy.
- Because of this, lenders will almost never negotiate a settlement.
- If you have a student loan in default, the lender can take any tax refund you have coming.
Despite these negatives, there is a positive.
The law allows you to have all of the information removed from your credit file by rehabilitating your student loan. You do this by contacting the lender and letting them know that you wish to rehabilitate the loan.
You will make acceptable payment arrangements, and make at least twelve consecutive payments. At the end of the year, all negative information with be removed from your file.
Regardless of if you are facing default, or have already defaulted on your student loans, the government provides many options to cure your debt. The key is knowledge, communication and action.
If a person does not have much credit card debt, will filing bankruptcy benefit them?
I have a friend who is considering bankruptcy because she got behind on her house note due to being laid off. Though she had 3 months of bill money saved to pay bills during lay off times, this lay off was almost triple that time leaving her with 6 months of bills that she could not pay at that time. She was able to keep utilities, phone and car notes paid with unemployment and was also able to defer student loans so that they would not go into default. However, her house notes were too high to keep up.
She works a job where lay offs are common so this happened about a year and a half ago as well and she got a few months behind on her house note. She worked with the mortgage company to get back on track. But now she is off track again due to extended layoffs.
She is working again but feels like she is drowning from the house note.
Would bankruptcy benefit? Will she loose her home if she file?
Bankruptcy will not help with the mortgage problem.