National Debt Relief - BBB Accredited Business - Get Relief From Credit Card Debt, Medical Bills And Unsecured Loans

How To Deal With Debt If You Borrowed Too Much

woman looking at receiptLearning how to deal with debt is not the easiest lesson. This is especially true if you are already drowning in it.

The sad thing is, you cannot live without debt – or at least it is difficult to not have debt. Our society has made debt quite important by inventing the idea of credit scores. This score is something that will help lenders and creditors determine if you can be trusted with a credit account. In order to have a good credit score, you need to be in debt and display good behavior in paying it back.

In our society, consumer debt indicates confidence in the economy. It also indicates that you are confident about your personal financial position. After all, you will only borrow money if you know that you can financially deal with debt. Unless of course you are facing an emergency. But even then, you cannot borrow money unless the lender knows that you can handle the credit that you are taking out.

Since our society treats debt as the norm, you need to understand that it is up to you to be careful about how much money you will borrow. You need to make the right choices because if not, you can end up compromising your future. It is important for you to determine if debt will bring you financial wealth or death.

According to a recent survey from, 37% of Americans are in a dangerous financial situation. It is revealed that 24% of the survey respondents have more credit card debt than their savings. 13% of their survey respondents are in a different situation but it is no less dangerous. They said that they do not have credit card debt, but they also do not have any savings. That means if something happens that will require them to spend beyond their budget, they could end up in debt – just like that.

Both of these situations can make their finances turn for the worse – with just one emergency situation.

While borrowing money is not necessarily something that you should avoid, you should always be careful to loan only what you can afford. When you end up borrowing too much, it might be more difficult to deal with debt.

Signs you borrowed too much on these top 4 debts

There are so many debts out there but we will be concentrating on the top four debts in the country: mortgage, student loan, auto loan and credit card debt. Let us discuss the signs that you borrowed too much money on these different loans. Later on, let us discuss how you can handle these debts after you have put yourself under so much debt.


Buying a house is one of the most expensive purchase that you will make. That makes mortgages one of the highest debts in every American household. Although that is true, this type of debt is something that will help you grow your equity. As you send in your payments, the equity in your home grows. That signifies that you own more and more out of your home.


The sign that your mortgage is starting to become more than what you can handle is when you find the monthly amortization difficult to meet. When you realize this, you should come up with a new plan to deal with debt. You know that you cannot compromise your home loan payments because you might lose your house in the process. Not only that, if your mortgage ends up being bigger than the actual value of the house, that means you really borrowed too much.

Student Loans

For the past few years, student loans have been making headlines because it keeps on growing and growing. It is starting to pull back the financial growth of young adults. A clear sign that you have a lot of student loans is when you are finding it hard to get a job that is paid enough to help you meet your monthly payments. Now this can be a problem especially when you have mostly Federal student loans. They have very aggressive collection methods that includes wage garnishment – something that they can do even without a court judgement. They can also get your tax refund, Social Security benefits, etc.

Auto Loans

In most cases, you are at a disadvantage when you get car loans. The moment you drive off the dealers with your car, it already depreciated on you. In essence, you will always borrow too much with this type of debt. That is why you need to exert caution when you deal with debt from buying a car. The truth is, it is ideal that you pay your car in cash – or at least, save up as much as you can so you can pay in cash. It is how you can keep your losses from being too much.

Credit Cards

Now this is the type of debt that you can easily borrow too much of. According to an article published on, the average American household owes $15,609 in credit card debt. This data came from the Federal Reserve and only includes households that are indebted. There are two ways to determine if you borrowed too much. The first is when you reach your credit limit. The second is when you can no longer afford to pay the minimum payment requirement. The thing about credit cards is that it makes purchasing convenient. You do not have to reapply for new credit in order to borrow money. As long as you have not reached your credit limit, you can go ahead and continue to use credit to purchase almost anything. That is what makes this debt one of the most dangerous that you can be involved with. It is also notorious for the high interest rate that can ruin your finances quite easily.

What to do when you borrowed more than you can handle

Now that you know the signs that you borrowed too much, it is time to find out how you can resolve this problem. Unless you deal with debt the right way, you will never achieve debt freedom. So here are our tips for the top 4 debts that you borrowed too much of.


We all know that not paying your mortgage would mean losing your home and the equity that you have built upon it. Now the best way to deal with this debt is to reach out to your lender. You need to inform them that certain changes happened to your finances that made it difficult for you to pay off your monthly amortization. Ask them about the options available based on how much you can afford to pay. Among your options would probably include refinancing your loan. The goal here is to get a new loan with better terms, use it to pay the old loan and continue paying the mortgage based on the new terms. The term should ideally have lower interest rates or a longer payment term – anything that will help you reduce the monthly amount that you need to pay.

Student Loans

You have to be careful when you deal with debt owed to the government. Their collection methods are quuite aggressive. In case you are in the midst of a financial crisis, you can apply for deferment or forbearance. If you do not qualify for it, you still have other options. When it comes to student loans, an article published on suggested three options that you can pursue.

  • Ask for forgiveness. If you work in the public sector or the army, you may be able to qualify for loan forgiveness. You need to check with your loan servicer or lender to find out if you can apply for forgiveness.
  • Qualify for a repayment plan. If you current repayment plan is difficult to meet, talk to your loan servicer if you can qualify for other repayment plans. The most common option are income-driven repayment plans. These are dependent on how much you earn each month and your financial position. The monthly amount that you need to pay is usually a percentage of your salary.
  • Automate your payments. In most cases, if you automate your student loan payments, you will get a discount. So if you need to lower your monthly payments and if you want to make it convenient, then opt for auto payments.

Auto Loans

The best advice when buying a car is to pay for it in cash. If you cannot afford it, then pay at least 20% on the downpayment. You should also try to limit your terms to 4 years or less. You can also be careful with the expenses associated with your car. If you can save on car maintenance costs, it can make your budget more bearable.

Credit Cards

To deal with debt borrowed through credit cards, you need to look at options that will give you low interest rates. You can use debt consolidation loan so you can put your balance into a low interest debt. Another option is balance transfer. You can get a 0% credit card, transfer the balance of your high interest cards and then pay off the principal while the 0% introductory period is still in effect. You can always get help by going to a non profit credit counselor. They give free consultations so you can get professional advice for your debt situation.

Here is a video about how a family and their financial struggles. Bryton, the one in the video, married young and she said that before marrying, their parents insisted that they take a Dave Ramsey course that will help them manage their finances. This came at a great time because both she and then fiance did not have any debts yet. So when the time came for them to borrow money, they were very wise about it. Bottom line is, you need to know how to handle your finances because it will not only help you make the right financial decisions. Financial literacy can also get you out of tight spots in case you made the wrong decisions. Watch this video to find out about how their financial knowledge got them through the ups and downs of their personal finances.

6 Important Pieces Of Financial Advice For Recent College Grads

student loan debtCongratulations! You’ve done it! Those four (or more) years of college are now in your rearview mirror. You’re excited and ready to start your new life. If you’re fortunate you already have a job or one lined up or maybe an internship. You’ll soon be making more money than ever before in your life. But before you charge off to start buying stuff it’s important to draft a financial plan. If you do this now you’ll have a much better chance of avoiding the common financial problems that plague many new graduates.

Following are six pieces of financial advice that can help smooth out your transition from college to the “real world.”

#1. Start saving

The first important tip in financial awdvice is to determine how you could live below your means. When you do this you will have extra money that you could set aside as an emergency fund. And trust us, you will ultimately have an emergency. This is even more crucial if you graduated owing on student loans. If so, this would at least put you in good company as roughly 69% of graduating college seniors in 2013 had student debt that averaged $28,400.

If you are now making a salary of, say, $2000 or $3000 a month your best move would be to try to live on $1000 a month and bank the rest. This would give you money you could use each month to pay off your debt. When you become debt-free you will have money you could save for retirement, to buy a house or to get a new car.

#2. Keep your spending to the minimum

It’s best to sit down, calculate your earnings and expenses and then put a limit on your spending. This is critical if you just snagged a new job. When you practice good financial habits now they will stand you in good stead the rest of your life. There are many smart phone apps available that would make it simple for you to do this. The best idea is to continue living as if you were still a broke college student. You survived on that tiny income for four years and there’s no reason why you couldn’t continue to do so for a couple more years and get a real head start on your savings or investing.

#3. Work on your money management skills

When you start your first job make sure to carefully review your employee benefits such as health insurance, retirement accounts, disability insurance and so on. You should also begin educating yourself on smart money management by reading a few books or even scheduling a one-on-one meeting with a financial planner. The important thing is to treat your finances as if they were yet another college course and do a lot of reading and research. The more you understand about personal finance the simpler and less stressful your financial life will be.

Girl looking at a laptop#4. Don’t forget those student loans

Don’t forget that if you have student loans your first payment or payments are due in October. If you fail to make a payment or if you are late in making one you will be in default and trust us that’s something you don’t want to happen. Technically you are in default on a student loan the day after you miss a payment. However, it will be 90 days before this will be reported to the credit bureaus and more than a year before your account might be turned over to a debt collection agency.

If you believe you’re going to have a tough time making your payments, go on the
U. S. Department of Education’s website and check out the repayment options available. There is one very popular plan called Graduated Repayment where your payments start low and then increase every two years. This can be an excellent choice if you have a job where you can see that your income will also increase in the years ahead. There are also three income-driven repayment plans. This is where your payments are tied directly to your income. The best of these is Pay As You Earn, which would cap your monthly payments at 15% of your adjusted earnings. This means that if you were out of work and earning nothing your monthly payments would be the same – nothing.

You should also contact your lender or loan servicer if you believe you’re not going to be able to make your payments. The sooner you make that call the sooner you will be able to get some help.

#5. Don’t fall prey to lifestyle inflation

When you get a big boost in your income it’s very tempting to go out and start buying things like a new car or to rent that two-bedroom luxury apartment. It can also be tempting to use your credit cards to pay for the furniture you’ll need for that apartment. Some people even take on credit card debt before their student loan repayments begin and then find that when they kick in they don’t even have enough money to buy groceries. This can lead to an endless cycle of default and deferment. And yes, it’s okay to upgrade your life somewhat after graduation so that you can say goodbye to those Ramen noodles but just don’t get carried away. Remember that those student loan repayments will soon come due and plan accordingly.

#6. Negotiate for a better salary

There’s nothing wrong with haggling over your salary and benefits – even when it’s your first job. For that matter, this demonstrates a sign of professionalism because even though you graduated recently you do understand how the working world works. You should, of course, express enthusiasm and appreciation for the job offer but remember that if you were able to negotiate just a small increase in your salary this will pay off in thousands of dollars over your working life. It’s also a good idea to practice your job offer conversation before you talk to that potential employer. Make sure to research your field so you will know what is a fair salary. If the salary is indeed fixed and you can’t negotiate anything better, focus on the other benefits, which can be worth as much as 33% of your salary. These are things that many first timers overlook. Make sure to ask about health care benefits, retirement accounts, vacation days, the flexibility to work at home and so forth. Just sit down, decide what’s important to you and then prepare for some professional haggling. You’ll probably find it just takes one round of negotiations.

How To Take Charge Of Your Student Loan Debts

money and graduation cap in chainsYou’re out of school now, you’ve gotten a start on your career, you have a place of your own and life seems good … except for one thing. You have those student loan debts hanging over your head. If you’re typical you owe around $26,000 because that’s what last year’s graduates averaged. Of course, if you borrowed money for graduate studies undoubtedly owe much more than that.

A brief history of student loans

Back in the 1960s the federal government started offering big subsidies to private banks. In turn these banks were to loan money to students. This continued until the 1990s when President Clinton instituted changes that made it possible for students to borrow directly from the US Department of Education. These are called Direct Federal Loans. If you received student loans anytime in the past 15 years the odds are that they are Direct Federal Loans – unless they were Perkins Loans and came from your school.

In 2007 the federal government initiated a new student loan repayment program called Income-based Repayment. This capped the monthly payments on certain types of federal loans at 15% of a person’s discretionary income. In 2010 Congress got even more generous and passed a bill creating a new repayment program called Pay As You Earn. This program caps monthly payments at 10% of a person’s discretionary income and forgives any remaining balances after 20 years. To be eligible for Pay As You Earn you must not have had an outstanding federal loan as of October 1, 2007, you must have had a Direct Subsidized or Unsubsidized Loan and the funds must have been dispersed on or after October 1, 2011. Plus, you must be able to prove a Partial Financial Hardship. Finally, Pres. Obama issued an executive order last year that made more people eligible for Pay As You Earn by extending it to people that acquired their student loans before October 2007.

Could you take charge of your student debts with one of these programs?

To qualify for either of these repayment programs or a third one called Income-contingent Repayment you need to prove that you have a Partial Financial Hardship. The way this is calculated without getting too technical is to take your gross income and then subtract 150% times the poverty line. Note: The easiest way to determine if you have a Partial Financial Hardship is with an online calculator such as the one provided by the U.S. Department of Education.

If you’re just out of school and unemployed

If you’ve been out of school for six months (or more) and are still jobless, the best thing you can do is contact your loan servicer to discuss repayment options. Conversely, the worst thing you can do is not make your payments. (More about this later.) As you have read there are several income-driven repayment programs available and you should sign up for one of them. Both Pay As You Earn and Income-based Repayment use your income to determine how much your monthly payments will be. Since you have no income, your payments could be zero dollars per month. That’s nada, zero or nothing. And it’s legal.

Would debt consolidation make sense?

There are instances where student loan debt consolidation would make sense. If you have multiple federal student loans that qualify, you could consolidate them into one new loan. You would then have better repayment terms, which should make it easier to repay them. For example, if you were to consolidate your Federal student loans into a Direct Consolidation loan you would extend the term of your loans from 10 to 30 years. Naturally you would then end up paying more interest over the term of the loan but your monthly payments will be much lower. In addition, you might still be eligible for some form of income-based repayment on the new loan. To see if you would be eligible for a Direct Consolidation loan, go to Student

woman smilingGet a forbearance or deferment

If it turns out that for some reason none of the repayment options makes sense for you, try for a deferment or forbearance. If you’re not familiar with these deferment is a period of time during which you don’t have to make payments on your principal or interest. You could be eligible for deferment if you’re still enrolled in school or are unemployed. To see if you would qualify, you will need to ask your lender or loan servicer. You could ask for forbearance if you find you don’t qualify for a deferment. This would allow you to stop making payments on your student loans for up to 12 months. However, the interest on your loans will continue to accrue. If you have an economic hardship, you could qualify for forbearance. However, forbearance be granted only by your lender.

Whatever you do don’t default

You’ll remember we said earlier in this article that the worst thing you could do is not make payments on a student loan. This is called defaulting on the loan or loans and it’s something you absolutely do not want to do. You’re considered to be in default the day after you miss a payment. However, this won’t be reported to the three credit bureaus for probably six months. This gives you time to work with your loan servicer to get caught up. In the event that you don’t fix things then after 270 to 360 days your loan could be turned over to a debt collection agency and things could really get ugly. Your wages could be garnished or a portion of your income tax refunds could be withheld. You will be unable to get any more federal aid and your debt will grow due to the expenses associated with collecting your debt such as court fees and lawyer’s fees. You may not be able to enlist in the Armed Forces and you’ll be ineligible for deferment. You will be ineligible for assistance under most federal benefit programs and your defaulted loans will stay in your credit reports for seven years and this will have a very negative effect on your credit score.

Last but maybe not least when you default on a loan, whether it’s a student loan debt or some other type of loan, you’ve basically stolen money from taxpayers or a private lender. When you signed up for those loans it was to finance a valuable commodity –your education. In return for that education you assumed an obligation, which was to repay the money. Whether you like to look at it this way or not if you default on your student loans you’re not much different from a person that engages in credit card fraud.

Choose a plan and get started

Regardless of whether you’re employed or not the best way to take charge of your student loan debts is by selecting a repayment program and getting started. For people just out of school one of the best options is Graduated Repayment. If you were to choose this program, your payments would start low but then increase gradually every two years. This can be an especially good solution if you know for sure that your earnings will also increase over the years. Beyond this, an income-driven repayment program such as Pay As You Earn should take the sting out of your monthly payments by making them very affordable.

Struggling With Student Loan Debt? Maybe You Should Move To New York

frustrated woman with credit card debtDoesn’t the term “loan forgiveness” have a nice ring to it? If you’re struggling under a huge pile of student loan debts than having them forgiven could be almost as good as having your sins forgiven. You have all that debt behind you and the rest of your life ahead of you. You could stop trying to live from paycheck to paycheck and actually start putting money aside for a new car, a wedding or even a house.

The lifelong effects of student debt

While you might think that getting those student loans repaid would be the end of things you’d be wrong. Student debts can have consequences that can drastically effect the rest of your life. For example, one recent study found that being in debt can cause you to choose a substantially higher-salary job and reduce the probability that you will choose a lower-paid “public interest” job. Why is this? It’s because if you have high student debts it’s most likely you’ll choose to work for a corporation in the private sector where you can earn high wages. If you have practically no student loans, you might be more willing to take a job involving public service such teaching or working for a nonprofit. Instead of being forced to put on a suit and tie and go to work every day, you might choose to move to one of the Third World countries and help fight hunger.

The same study found that high student debt can have a significantly negative effect on small business formation, which is sort of academic speak for people’s interest in becoming entrepreneurs. When you think about it, this just makes sense. If you go to work for a corporation you should have enough money to handle that student debt burden. But if you go out on your own, your income will be more volatile – at least to begin with. This can be harder to manage when you have student loans, which in turn can impact your credit rating.

Another consequence of student loan debt is that the average length that people are paying off these loans is up 80%. While it used to be the average length of repayment was 7.4 years it is now 13.4 years. If everything else is equal, a big increase in how long you will be repaying your student loans means that you’ll have to dedicate a bigger portion of your lifetime income to this. In turn, this can have a serious consequence on your ability to build wealth or just save for retirement.

Finally, another study found that every additional $10,000 in student loans decreases the probability of getting marriage by at least seven percentage points. Just think about this for a minute. If you added on $30,000 in student loans the odds of you getting married would drop by more than 20% or one in five.

So how does the state of New York come into the picture?

The state of New York is now offering some loan forgiveness programs on its own – separate from the ones offered by our federal government. If you are an attorney or an indigent legal services lawyer move to New York. You could earn an award designed to retain you if your are an experienced district attorney, an assistant district attorney or provide legal services to the indigent.

Licensed social workers can also earn an award if they have a minimum of one year of employment in a critical area of human services. Are you a nurse and could you teach? The state of New York has a nursing faculty loan forgiveness program the purpose of which is to attract more nursing faculty members and adjunct clinical faculty teachers in nursing.

What do you think about becoming a farmer? The New York State Young Farmers Loan Forgiveness Incentive Program is meant to inspire college students to become farmers in the state of New York. It provides awards for loan forgiveness to anyone who obtains an undergraduate degree from a New York state university or college and agrees to farm in the state of New York for five years on a full-time basis.

If you’re not an attorney, a social worker, a nurse and have no interest in farming

In this case, you would be better off staying where you are and trying for federal student loan forgiveness. This comes in three flavors.

Public service loan forgiveness

First, there is Public Service Loan forgiveness. To qualify for this program you would need to have certain types of student loans and make 120 qualified, on-time payments on those loans while working in a public service job. This could be working for a federal, state or local government entity or agency or for a nonprofit certified as a 501(c)(3) by the IRS. Those 120 on-time payments mean, of course, 10 years but at the end of that all your remaining balances would be forgiven.

Teacher Loan ForgivenessTeacher

Second, if you’re qualified to teach certain subjects, you could get as much as $17,500 of your student loan debts forgiven. You would need to teach for five complete and consecutive academic years in a certain elementary or secondary school or in an educational service agency that serves low-income families. What this translates into is that if you currently owe $30,000 in student loan debts this could reduce your burden to $12,500, which should be much easier to handle.

Perkins Loan cancellation

Since Perkins loans come from the school you attended you will need to contact it to apply for this type of cancellation. In general, you can usually have a percentage of your loan cancelled for each year that you work in one of these jobs.

  • Member of the US armed services serving in an area of hostilities
  • Medical technician or nurse
  • Teacher
  • Volunteer in the Peace Corps or ACTION program (including Vista)
  • Head Start employee
  • Corrections or law enforcement officer
  • Family services or child worker
  • Professional supplier of early intervention services

Programs that could assist you

If you don’t qualify for one of these three programs, don’t give up. There are some federal programs that could assist you in repaying your debts in return for a service commitment. This includes the US Office of Personnel Management Student Loan Repayment Program, the National Health Service Corp. Loan Repayment Program and the Armed Forces Student Loan Repayment Program. Each of these programs offers different rewards. For example, the US Office of Personnel Management Student Loan Repayment Program offers up to $10,000 a year for loan repayment to a maximum of $60,000. The National Health Service Corp. Loan Repayment Program offers an initial reward of $30,000 or $50,000 and the Armed Forces Student Loan Repayment Program could mean up to $65,000 of your eligible loans would be repaid – depending on your branch of service.

Income-based repayment

You say you wouldn’t qualify for any of these programs? There is a class of federal loan repayment programs called Income-driven Repayment that could help ease your burden. Here’s a brief video, courtesy of National Debt Relief, that explains what it’s all about.

Restarting Your Education? Check Out These Four Important Tips

This year resolutions conceptHave you made your New Year’s resolutions for 2015? Is one of them restarting your education? The problem with New Year’s resolutions is that it’s easy to get a full head of steam going at first but much more difficult to complete them as the months go by. If one of your resolutions is restarting your education to complete your degree it’s important to understand that any student loans you had before haven’t gone away. They’re like that Roach Motel where roaches checked in but they never checked out. Once you have student loans, there’s no getting away from them. They will stay with you until you repay them or if you could get them canceled (more about this later).

Given the fact that your goal is to return to school this year it’s important that you do it the smartest financial way you can. As a nontraditional student there are three things to understand that would help you do this.

1. Get any existing loans in order

If you borrowed money when you were in school before it’s important to know the status of your loans. The website National Student Loan Database System has all the information on any federal student loans you had including the type of loan, when the money was disbursed, the last payments you made and your balances. When you check out your status in this database you may find you have some problems. If so, you will need to get these taken care of before you can get any additional federal aid. This is especially important if you find you have a student loan in default. Unfortunately, it’s very easy to default on a student loan because all you have to do is be one day late on a payment.

If you do find you are in default on a federal student loan you will be ineligible for any more federal student aid. You will also lose the benefits that come with federal student loans including Extended Repayment, Graduated Repayment and Income-based Repayment. Plus, a loan default is one of the worst things to have in your credit reports.

What to do if you have a loan in default

There are three different ways you can get a student loan out of default. They are loan consolidation, loan rehabilitation and, of course, loan repayment. If you were to choose to rehabilitate your Direct Loan or FFEL Program loan, the Department of Education and you must agree on an affordable and reasonable payment plan. (Note: if you have a Perkins Loan you will need to contact your school.) Your loan will have been rehabilitated when you have voluntarily made the payments you agreed to and on time and a lender has agreed to buy your loan. If you are able to and is and is one of the back-to-school problem with New Year’s resolutions is that it’s easy to get going for a do this before the last day of classes of your school year you may be able to retroactively get aid for the entire year. Of course, if you need to rehabilitate a loan this may mean you’ll have to delay the start of your schooling.

2. Understand the differences between federal and private student loans

As eager as you might be to restart your education you need to be careful the type of loan you sign up for. There are really only two types. They are private loans and federal loans. Private loans are just that. They come from private lenders such as a credit union or bank. Two of the biggest private lenders are Wells Fargo and Discover. However, as a general rule these loans do not come with the same repayment benefits as federal loans. They generally have a fixed interest rate and a fixed term. In comparison, federal student loans offer a number of different repayment options as well as postponements, cancellation and loan forgiveness. If for some reason you can’t get enough federal aid to cover your schooling you may have to get a private loan. However, it’s best to exhaust your options for federal student loans first and then shop around for the best deal you can find in a private loan.

3. Be smart about which program you choosestudent loan debt

You’ve probably seen dozens of advertisements for different kinds of degree programs. The important thing is to do the research so you will know what to expect before you sign up for any one of them. Your goal should be to borrow sensibly for the educational program that will be best for you. For example, since you’re returning to school you might decide to take a different route to your degree such as attending a community college first to complete your lower-level course requirements. While this can be an excellent option just make sure that your credits will transfer.

There are also a huge variety of online programs and for-profit colleges available but again be sure to do your research before you sign up for any of these. You should be especially careful in the case of for-profit schools. As an example of why this is true, the federal government recently forced Corinthian College to shut down 97 of its US campuses by withholding access to any more federal money. The school was in trouble financially plus the government thought its ads and claims were misleading. The Department of Education has also targeted schools such as ITT Technical College and the Art Institutes chain.

4. Know it’s possible to get federal loans cancelled

As noted above another benefit of a federal student loan is that it’s possible you could get it canceled. In fact all of your federal loans will be canceled if you become totally and permanently disabled. You may also be eligible to have your loans canceled or discharged if the school falsely certified that you would be eligible to receive the loan based on your ability to benefit from its training or if it signed your name on a promissory note or application without your authorization. You could also have your federal loan canceled if the school certified your eligibility but due to a mental or physical condition, age, criminal record or other reason you would be disqualified from employment in the occupation in which you were being trained. And you might be able to get your Direct Loans or FFEL Program loans canceled if you withdrew from a school but it didn’t pay a refund that it owed to the lender or to the US Department of Education.

What You Need To Know About Student Loan Deferment And Forbearance

young man holding empty wallet and booksAre you struggling with student loan payments you can’t afford? You are not alone. A lot of borrowers are feeling the same way.

This type of debt has become one of the most dangerous credit obligations. The main reason is the aggressive collection methods for those who default on their loans. One of the biggest mistakes that you can ever make on this credit obligation is not to make payments.

According to an article published on, the consequences of defaulting on your college debt are as follows:

  • Ruined credit history.
  • Increase in loan balance since interest will continue to accrue and collection fees will all be capitalized on your balance.
  • Legal suits filed against you.
  • Wage garnishment, and threatened Social Security benefits and tax refunds (at least for federal student loans).

There are probably more negative consequences apart from these and this is why defaulting on this type of debt is highly discouraged.

Fortunately, there are options for you to avoid defaulting on your student loan debt. Of course, you will have to qualify for them as you cannot just tell them that you are having a hard time paying off what you owe from school. You need to prove to them that you are in a financially difficult situation.

What happens to your college debt when in deferment or forbearance?

Even if your finances cannot afford to continue making payments towards your student loan, your lenders do not really care about that. All they really care about is how you will repay your student loans. No ifs and no buts. If you choose to ignore it, you will only be making things worse. This is why you have to talk to your loan servicer or private lender about your options. And two of the options that they will offer you is either deferment or forbearance.

Of all the choices that you have to stop making payments (or at least reducing them) without defaulting on your loans, these two are most encouraged options. Let us define them both.


Deferment is a time when you are officially allowed to stop sending payments towards your student loans. When we say official, it means you will not be charged with late penalty fees and your account will not be deemed as a defaulted loan. Of course, this is only temporary. It will end at some point (sometimes up to 3 years) and once that period ends, you are expected to pay your loan as usual.

It is important to note that most student loans will continue to accrue interest while in deferment. If you have subsidized federal loans, this means the government will pay for your interest while you are in deferment. In this situation, deferment will really benefit you. However, if you do not have a subsidized loan, the benefits will not be as extensive. The interest that you will not pay during this period will be capitalized and added to your outstanding balance. That means, after your deferment is done, you will find that your loan balance has grown. The longer you stay in deferment, the bigger your debt becomes.


Forbearance, on the other hand, is your option when you do not qualify for deferment. This is when you are allowed to stop or lower your monthly payments without being charged with late penalty fees. This can go as long as 12 months. The difference with a deferment scenario is your interest will always accrue – regardless if you have a subsidized or unsubsidized loan.

Obviously, the better option here is deferment but that would depend on the type of student loan that you have, your financial situation and your reason for deferring on your loans.

According to an article published on, a lot of borrowers are in deferment or forbearance as of the first half of 2014. Specifically, 18% are in deferment while 15% are in forbearance. It is hard to determine the main reason for borrowers to opt for these two temporary student loan relief. The records kept by the government is not really complete or organized enough to provide this data.

Scenarios that allow you to postpone or reduce your student debt payments

As mentioned, not everyone can be approved for deferment or forbearance. Here are the specific requirements as provided by

You can apply for deferment, at least this is true for federal student loan borrowers, if you are in the following situations.

  • You are enrolled at least half-time in a qualified college or career school.
  • You are still studying in relation to your graduate studies or in a rehabilitation training program for disabled individuals.
  • You are unemployed or unable to find work (can avail of up to 3 years of deferment).
  • You are currently experiencing economic hardship (can avail of up to 3 years of deferment).
  • You are currently serving an active duty in the military during a war, military operation or national emergency.
  • You are a member of the National Guard/Armed Forces Reserve or you were called to duty while enrolled at least half-time (current or within 6 months of enrollment) – as long as the period is within 13 months following the end of your active duty or return to enrollment.
  • You are within a period of service that qualifies for a Perkins Loan discharge or cancellation – applicable to Perkins Loans only.

All of these (except for the last one) are applicable to Direct, FFEL and Perkins Loans.

When it comes to forbearance, there are two types that you can avail and the qualifications will depend on them.

  • Discretionary Forbearance. This is when the lender decides if you will be allowed forbearance. Usually, you will be approved if you can prove financial hardship or illness that leaves you unable to work and earn money.
  • Mandatory Forbearance. This is when your specific situation requires the lender to grant you forbearance. These situations include internship or residency (medical or dental), you received a national service award after serving a national service position, your teaching profession qualifies you for a teacher loan forgiveness, you qualified under the US Department of Defense Student Loan Repayment Program, or you are a member of the National Guard. It is also possible to get forbearance approval if your student loan monthly payments amount to 20% or more of your monthly gross income.

Tips when postponing or reducing payments on your college loans

Even when you qualify for deferment or forbearance, you need to know a couple of tips first before you can really demolish your student loan debt. Here are a couple of tips that you can follow.

  • Check if you can at least pay the interest of your loan. Deferment is really beneficial for those who have subsidized student loans. That means the government takes over the interest payments. If your loan is unsubsidized, that means your interest is accruing while in deferment. In forbearance, your interest accrues even if you have subsidized or unsubsidized loans. As mentioned, this means you will have a bigger balance at the end of the deferment or forbearance period. If you can pay the interest, you can keep it from accruing or capitalizing on your principal balance.
  • Live a frugal life to strengthen your finances. Being approved of deferment or forbearance on your student loans mean you are in a financial hardship. To help maximize the benefit of these two, you need to adapt a frugal lifestyle to lower your expenses significantly. That way, you can increase your extra money thanks to either the deferment or forbearance and your lower expenses.
  • Research on repayment plans that you can use after. As mentioned, this is a temporary arrangement on your student loan accounts. It will end. And when it ends, it will not be towards forgiveness. That means you still need to pay off what you owe. Make sure that while you are in deferment or forbearance, you take this chance to research on the repayment options that you can use. If that means going into a public service career, then you need to be aware of what you need to do to qualify for these.

6 Important Student Loan Resolutions For 2015

National Debt Relief now offers Student Loans ConsolidationThere‘s a brand new year upon us and with it comes the need to make some New Year’s resolutions. By this we don’t mean the standard lose weight, give up smoking or get a new job. What we mean is that if you’re a college student or will be entering college next year there are some resolutions you need to make for 2015 that are specific to your situation. If you choose to make these resolutions you can graduate from college either debt-free or owing very little in student loans. This is important because student loan debts can be a drag on your life for the next 10 years if not longer. Recent college graduates owe an average of anywhere from $16,500 to $30,000 depending on which source you want to believe.

Even if you were to graduate owing just the $16,500 that’s a lot of debt to have to pay back when you’re just starting work. For that matter, you may not even be able to get a job as the Economic Policy Institute recently reported that about 8.5% of college graduates between the ages of 21 and 24 were unemployed. Or you could end up part of the roughly 44% of recent graduates that had a BA degree or higher but were in a job that technically did not demand a bachelor’s degree and were, thus, “underemployed.”

Resolution #1: I resolve to check out all possible alternatives

Go back and read the previous paragraph. Suppose you were unable to get a job or became underemployed. While this might be bad news it would be even worse news if you owed $16,000 or more in student loans.
Before you sign up for any student loans check out the options. Assuming that you didn’t get a big fat scholarship from your school you should go to a website such as The College Board where you could search for information on thousands of different college scholarships, grants and internships. There is also CollegeNET, which is a searchable database of more than 600,000 awards. Does your mom or dad belong to a fraternal or social organization such as the Elks, Moose or Rotary International? These organizations often have scholarships available to the children of their members. The company that your mother or father works for may have scholarships available to the children of their employees. All these alternatives are certainly ones you need to check out before you start borrowing money.

Resolution #2: I resolve to get a part time job

Almost every college student will qualify for some sort of financial assistance. For example, if you are unable to get a full ride scholarship you might be offered a part scholarship or a grant of some kind. Beyond this, you need to think seriously about getting a job to supplement whatever financial assistance you’ve been given. There’s hardly a college town that doesn’t have part-time jobs available from waitressing to sales clerking in mall stores. These jobs generally don’t pay a lot per hour but if you were to work 20 hours a week at eight dollars an hour you’d be earning better than $600 a month pretax. This could go a long way towards paying your tuition and maybe even put a dent in the cost of your room and board.

Resolution #3: I resolve to live at home – for at least two years

While most high school graduates can’t wait to go away to college it’s better to stay at home at least for your first two years. When you live at home you basically eliminate all room and board charges, which can cost from $7500 to $9000 per year depending on whether you attend a public or private university. Many of today’s smart students are living at home and attending a two-year college before going away to school. Your first two years at college will consist mostly of taking “basic” courses that are generally the same whether you attend a two- or four-year school. If you were to do this you would save around $15,000, which might be $15,000 less in student debt. If you’re lucky enough to live in a town with a good four-year college or university then living at home for those four years could save you as much as $30,000.

Resolution #4: I resolve to understand student loans

One of the biggest downsides of student loans is that for most people they are just too darn easy to get. All you generally need to do is walk into your school’s financial aid office, sign a paper called a note and presto! You have money available to pay for your next semester. If you will be required to take out a student loan or loans you need to know the different types. All federal student loans are now called direct loans because they come directly from the Department of Education (ED). These loans come in two types. They are either subsidized or unsubsidized. Subsidized loans are where the federal government covers the interest on them while you’re in school at least half time or are in a period of deferment. These loans are based on financial need, which is determined by your college or university. In comparison, unsubsidized student loans are not needs based but require that you do pay the interest on your loan or loans during all periods that you be in school.

Resolution #5: I resolve to not ask my parents to get Parent PLUS Loans

These loans are unsubsidized and available to the parents of dependent students as well as graduate/professional students. They are to help pay for educational expenses up to what it costs to attend the school minus any other financial assistance. Since they are unsubsidized, your parents would be required to pay the interest on them during all periods that you are in school. There are several reasons why you should not ask your parents to take out one of these loans. First, the interest rate is currently 7.21% for loans disbursed after July 1, 2014. In comparison your parents might be able to get a home equity line of credit with an interest rate as low as 2.99%. But second and more importantly do you really want to stick your parents with a pile of debt that could take them 10 or 20 years to pay off? Assuming that your parents are in their early 40s, a Parent PLUS loan could keep them tied up in debt until they were ready to retire.

Resolution #6: I resolve to graduate in four years

Did you know that according to a recent study only 19% of students graduate in four years? This might explain why so many of them graduated owing $16,000 or more. If you were to take an extra year to graduate this would increase your cost or debts by at least 20%. You could avoid this by buckling down, taking a full 15 credit hours or more a semester and graduating in four years. For that matter, if you’re really smart and a hard worker you might be able to graduate in just three years, which would reduce your costs dramatically. And if you don’t think that going to college for a fifth year will have serious consequences, watch this short video on the true cost of not graduating in four years …

Older Americans And Student Debts — A Bad Combination

Elderly coupleAre you one of the estimated two million Americans age 60 or older that still owe on their student loans? It can be tough to be saddled with student debts when you’re in your 30s or 40s but it can be lots worse if you’re in your 60s. You could even find that those old student debts are jeopardizing your Social Security benefits. This is because Uncle Sam can be a very unforgiving relative as our government has the right to seize portions of the Social Security checks of those that failed to repay their federal student loans. In fact, over the past year the government has withheld the Social Security benefits from 140,000 borrowers that were delinquent on their student loans. To make matters worse the federal government relies more and more on private collection agencies to go after delinquent borrowers and these agencies can make a person’s life nothing short of a living hell.

 You could be shocked

If you’re 60 or older and one of those two million Americans that still owe on their student loans you could be shocked when your Social Security check arrives and you find it’s been slashed by $100 or more. If you’re typical you depend a lot on that check to either support you or to supplement your savings. A $100 hit might not seem like much to some people but for those living on Social Security it could mean buying fewer groceries or having to cut back on some other necessity of life.

 If you’re not in default

If you are in default on a student loan meaning that you just quit paying on it some years ago that’s one thing. If your loans are in good standing but you’re struggling to meet your payments you could opt for Income-driven repayment. There are actually three Income-driven repayment programs available one of which would set your payment at no more than 15% of your discretionary income. In case you’re wondering about your discretionary income Uncle Sam defines it as the difference between your adjusted gross income and 150% of the federal poverty line, which corresponds to your family size and the state where you live.

There is an even better Income-driven repayment program called Pay As You Earn that would cap your monthly payments at just 10% of your discretionary income. However, this program is available only to those that took out loans very recently. And if you have older Federal Family Education Loans you would not be eligible for this program. However, you could use a similar one called Income-sensitive repayment. This is where you choose a monthly payment amount between 4% and 25% of your monthly income. Unfortunately, you can only use this plan for five years. But you could consolidate your existing Federal Family Education Loans into a new Federal Direct Consolidation Loan and this would then make you eligible to take advantage of the Income-based repayment plans.

 Did you take out Parent PLUS loans to help your child?

If you did take out Parent PLUS loans things get a little stickier. These loans are technically not eligible for Income-based repayment but if you were to consolidate them into a Direct Consolidation Loan, they would then become eligible for the Income-contingent Repayment program. While this program also bases your payments on your income and family size your payments would generally be higher than those under Income-based Repayment.

 If you are in default

If you just stopped paying on a federal student loan some years ago you are in default. This means you could see up to 15% of your social security benefits garnished. Sadly enough, according to the GAO (Government Accountability Office) more than 150,000 people receiving Social Security benefits saw their Social Security garnished in 2013 as a result of their student loan debts. And of this group 36,000 were over the age of 65.

The good news

If your Social Security benefits are being garnished you could take advantage of some of the options outlined above to reduce the amount being taken out of your check. Under certain circumstances, your payment could be as few as zero dollars. But you will first have to get your loan or loans out of default – either through consolidation or rehabilitation. If you want to do this you will need to contact your lender or loan servicer to discuss your options. Consolidation is fairly self-explanatory but rehabilitation is a bit trickier. To get a loan or loans rehabilitated you and the US Department of Education would have to agree on an affordable and reasonable payment plan. You would then be required to voluntarily make those payments on time and a lender has purchased your loan. At that point your loan will have been rehabilitated and you would again be eligible for benefits such as the Income-driven Repayment programs.

Private student loans

Stamp Shows Consolidated Loan approvedIf you cosigned on a private student loan for one of your children then, as you may have learned, you’re on the hook for repaying it. Since private student loans don’t offer the same repayment options as federal student loans you should consider either refinancing or consolidating it. Both Wells Fargo and Discover recently announced that they’d be offering modifications on private student loans for borrowers that are having a tough time financially. You could also contact your lender and see about postponing your payments although your interest will continue to accrue and you may be charged a fee for this.

The worst-case scenario

Failing everything else there is always the “nuclear option” of filing for bankruptcy. Although it is very difficult to get student loans discharged through bankruptcy it is not impossible. There’s what’s called the Bruner test. It’s a three-part test the bankruptcy judge would use to determine whether or not to discharge your student loans. The first part of this is that you must be able to show that you cannot maintain a minimal standard of living based on your current income and expenses if you are forced to repay your loan(s). Second, you must be able to demonstrate that this situation is likely to persist for a large portion of your repayment period. And third, you must be able to show that you have made what’s called a good-faith effort to repay your loans.

 It may not be easy

Repaying student loans may not be easy at any age but it can be particularly difficult if you’re an older American. However, if you learn about the alternatives and options available to you this can go a long way towards earning you some peace of mind as you head into 2015.

How To Pay Off Your Student Loans Without Having To Live On Mac & Cheese

money and graduation cap in chainsWe understand that you really do want to pay back those student loans. The problem is you never seem to have enough money to make those loan payments and yet have a decent lifestyle. You worked hard to get through college but you’ve learned one of the sad facts of life, which is that a starting salary is just that – the lowest salary you will probably ever earn. So what can you do in the meantime about those stupid, err, student loans?

#1. Understand your options

Whether you realize this or not when you graduated you was automatically put on what’s called 10-Year Standard Repayment. This is where you have a fixed interest rate and a fixed monthly payment for 10 years. If you are struggling to meet those fixed monthly payments the good news is that you have options. One of the best of these is called Graduated Repayment. This is where your payments start low and then gradually increase every two years. This repayment plan could be an excellent option if you believe that your income will also increase over the next 10 years. A second option, Extended Repayment, is just what the name suggests. It’s a way to extend the term of your loans to as long as 30 years. This would probably result in the lowest possible monthly payments but then do you still want to be paying on your student loans when you’re in your 50s? Finally, there are three Income-driven programs. If you were eligible for one of these, Pay As You Earn, your monthly payments would be capped at 10% of your discretionary income.

Here, courtesy of National Debt Relief, is a brief video that explains more about the repayment options available to those that have federal student loans …


#2. Remain organized

If you’re not careful the task of managing your student loans can become like trying to herd cats. You need to stay organized which means keeping track of your loan information. If you’re not sure of how much you owe and on which loans you should go to the National Student Loan Data System for Students ( Here is where you will find all the information regarding your federal student loans including the types of loans, when the funds were disbursed, how much you owe on each of your loans and your interest rates. This is the fundamental information you need in order to manage your student loans and make sure you keep current.

#3. Have a plan

Many experts say that when you’re first out of school you should try to limit your required payments as much as possible. This is because it’s equally important to have an emergency savings fund in the event the transmission falls out of your car or you have a medical emergency. You should definitely try to sock away enough money to cover at least three months of expenses. After you’ve done this, you could then consider increasing your loan payments though you will want to ensure that this doesn’t mean incurring penalties and that any extra payments you make will go towards your principal loan balance. You might also consider consolidating or refinancing your student loans and what it is you would need to do to qualify. As noted above, there are a number of different repayment programs for federal loans. You could make your payments more affordable with just a little planning. As an example of this when you’re collecting information to prove your income level be sure to provide the most accurate information as your situation may have changed radically since you filed your taxes.

#4. Automate your payments

We understand that repaying your student loans can seem less important than buying food or paying rent but it is critical that you stay current. Federal student loans are considered to be in default the day after you miss a payment. However, you won’t be in serious trouble until you haven’t made a payment for 270 days because this is when your loan may be turned over to a federal debt collector. Trust us when we say you don’t want this to happen. Once your loan goes to a debt collector you could see a portion of your wages garnished as well as a portion of your income tax refunds. You would lose your eligibility for any additional student loans and all those nice options such as Graduated Repayment would go away. A better solution than trying to remember to write a check every month is to automate your payments. This is where your loan servicer automatically deducts the money from your bank account every month. Of course, for this to work the money has to be there. Assuming that it is, you will then never miss a payment and won’t ever have to worry about going into default. If you check with your loan servicer you might even find that it offers discounts and incentives for you to enroll in automatic payments.

#5. Check out all available options

The good news is that there may be options available to you that you’re not even aware of that would help you pay down your loans. For example, there are employers that offer assistance with student loans as part of their benefits programs. Other companies might be willing to provide you with some help if you ask. Believe it or not you could also volunteer your way to a debt-free life. Plus, you could deduct up to $2500 of your student loan interest from your income tax if you fall within a certain income range. It might be tempting to use your tax refunds to pay for a trip to Mexico or the Caribbean but it would be far better to use them to pay down your student loan debts.

Broke woman student holding books and empty wallet#6. Understand what’s happening with private student loans

If you had to get private student loans to finance your education you were pretty much stuck until very recently. Private lenders such as Wells Fargo and Discover offered zero options. You had a fixed monthly payment, a fixed interest rate and a fixed term and that was it. However, as Bob Dylan has sung, “the times they are a changin.” For example, Wells Fargo is lowering its interest rates to as little as 1% in a program that is now available to all eligible borrowers that are up to or around 120 days and 130 days behind in their payments. This new program is also available to those who had been on time with her payments but are in risk of falling behind because of unemployment, pay cuts or medical issues. If you have defaulted on your loan or are 130 days or more late with your payments, you would not be eligible for this program.

Discover has started allowing some borrowers to make interest-only payments for temporary periods of time. It has said that it will roll out permanent modification options early next year, which could include interest-rate reductions and even partial loan forgiveness. Right now, the interest-only option is only available to those that are less than 60 days late on their payments and were not previously in a similar repayment option.

Don’t wait. Act now

If you’re struggling to repay a private loan or loans don’t wait for these companies to come to you. Contact Wells Fargo or Discover immediately – especially if you are possibly headed for default.

Coping With The Living Nightmare Of Student Loan Debt

zombieIf you graduated owing $10,000 or less in student loan debts, congratulations. This makes you the member of a very small club. Students this year graduated owing an average of $29,400 each and remember this is just the average and doesn’t include those who went on to get a Masters degree, a PhD or to become a lawyer or a doctor. One recent study found that about 40% of outstanding student loans were used to finance graduate and professional degrees rather than just bachelors or associate degrees. Graduate students actually owe an average of $57,600 each.

What to do if you owe $50,000, $100,000 or more?

If you find yourself facing this much debt it may seem hopeless. This can be one half of your life – assuming you’re actually able to find a job – and your earning power is still on the low side. As an example of how bad this can be if you did owe $50,000 at 6% and were in Standard 10-Year Repayment your monthly payment would be $550.10. And it doesn’t take a mathematical genius to calculate how much of a negative effect that would have on your life.

Sit down and analyze your situation

There’s an old poem where the fog “crept in on little cat feet.” Unfortunately, student loan debt can be the same way – it can just creep up on you. So if you’re looking at $50,000 or more in student debt the first thing you need to do is sit down and sort it out in terms of how much are federal loans versus how much are private. The reason to do this is because federal student debt is almost always easier to deal with. For example, you could switch out of Standard 10-Year Repayment and into one of the three Income-driven repayment programs or into Graduated Repayment where your payments would start low but then gradually increase every two years. On the other hand, private student loans tend to be very inflexible and it’s almost impossible to get them forgiven.

Contact your loan holders

If you have federal loans you should first contact your loan holders to see what repayment options would be available to you. If you don’t know your loan holders, look them up at http://// This is the national database of student loan information and it’s where you’ll be able to find everything you need to know about your federal student loans including how much you owe on each, your types of loans, when the money was disbursed and how long you will have to repay them. One of the biggest advantages of federal student loans is that regardless of which repayment program you’re on you should eventually be able to earn forgiveness. As an example of how this works if you are on Income-based Repayment and make all of your payments as required and on time then after either 20 or 25 years (depending on when you got your loan) any remaining balances would be forgiven. Of course, you could also approach any private lenders to see if you could get the terms of their loans modified due to hardship but this may not be easy. Three of the biggest private lenders – Wells Fargo, Discover and Sallie Mae – have said that they will soon offer some loan-modification programs but it is unclear as to how helpful these will be. And it’s very unlikely that will include any form of forgiveness.

Forget the bankruptcy myth

One of the biggest myths surrounding student loans is that it’s impossible to get them discharged through bankruptcy. The problem is that this belief is so widespread the vast majority of people who file for bankruptcy don’t even try to get their student loans discharged. Now, if you did borrow money to finance your education you do have a moral and legal obligation to pay back the money. But if life has thrown you a great big curveball and you can’t see any way to recover from your financial situation then bankruptcy might be your best option.

Understand the Bruner test

You could get your student debts discharged through bankruptcy if you can demonstrate you have an undue hardship. Unfortunately, the term “undue hardship” is not defined within the bankruptcy law. This means your bankruptcy court would ultimately decide what it means. In most cases it will apply the Bruner test. To pass this test you would have to demonstrate three things. First you would have to show that if you were to continue paying on the loan you would be unable to sustain a minimum standard of living. Second, you would have to show that your financial circumstances are unlikely to change in the future. And finally, you must be able to demonstrate to the court that you have made a good-faith effort to pay back your loans.

If you meet these criteria

If you believe you pass the Bruner test you will need to request that your bankruptcy attorney file what’s called an adversary proceeding. This is basically a lawsuit within the bankruptcy case itself. Technically speaking you could file an adversary proceeding yourself but due to the complex nature of these cases, it is very strongly recommended that you get a qualified bankruptcy attorney and especially one that has experience with student loan debts.

woman thinkingAnother possible strategy

In the bankruptcy code an educational loan is described as one that was used at least in part to attend an eligible education institution. It further defines an eligible education institution as one that can participate in federal student aid programs. Some people have been able to successfully argue that because their private student loans were used to attend schools that were not eligible for federal student aid programs then the loans don’t fall under the definition of an education loan and should be discharged.

Even though it is possible to get student loan debts discharged through bankruptcy consider this carefully before filing. Federal student loans have a myriad of income-related repayment and forgiveness options so you should be able to find a repayment strategy that you could manage. Plus, a bankruptcy will stay in your credit file for up to 10 years. You might be able to get new credit in as few as two or three years after your bankruptcy but it will come at a very high cost. The reason for this is because a bankruptcy will totally trash your credit score. If you were to find yourself with a credit score of 600 or less you could end up paying as much as 18% interest on a new credit card or auto loan.

While a bankruptcy will stay in your credit file for 10 years it will stay in your personal file for the rest of your life. So it could turn up to haunt you 20 years from now when you apply for a new job and your prospective employer checks your personal history. You might remember the old athletic shoe slogan “just do it. In the case of your student loan debts the best option is to “just pay them”.

Mobile Menu