Submitted by Rachel R on Fri, 09/22/2017 - 10:31am
What can you do about student loan debt in Wilmington?
Image Source: Flickr User DonkeyHotey
Student loan debt is on the rise and has been for decades. Most students come out of college owing close to $40,000 in loans. For most Wilmington consumers, that’s a lot of debt to face, particularly when the job market remains tight for recent graduates. Worse off are those that don’t make it to graduation but are still saddled with rocketing debt. If you can’t afford your student loans, you might be wondering what happens if you just stop paying them. Here’s a look at the consequences of shirking school debt.
Student Loans Are Increasingly Overwhelming
Some Wilmington graduates come out of school owning as much as a modest home mortgage in student loans. For those heading into careers in law and medicine, this might be manageable, but for others, it’s a staggering weight that can bury them. What’s profound about student loans is that it’s the only type of debt you can take on without proving your ability to pay it back later. It’s also debt that comes with no informed consent for the debt you’re adopting.
Think about when you buy a car – you sign a loan agreement that contains lots of legalese but then there is a summary document that’s required by law. It shows you how much the principal of your debt is, how much interest you will pay, exactly how much the monthly installments will be, the interest rate percentage, and the total amount you will pay back when all is said and done. The same document is required with a mortgage – but with student loans, most borrowers are in the dark.
Student Loans Are Debt That Creeps Up on You
Wilmington consumers with student loans likely didn’t know year to year in college, how much debt they had accumulated. At the beginning of a semester, you’re given documents by the financial aid office and you sign, you get your money, and there are no numbers shown you except for the ones on that specific loan document. It’s difficult to find out how much your debt-to-date is and to speak to a representative of the lender holding your debt because the student loan system is complex.
It’s not surprising that most people don’t know how much debt they’ve accumulated until they get their first student loan statement after graduation. And to compound the confusion for Wilmington residents with student loans is that you might have bills from several different loan servicers. Your student debt can be fractured across multiple servicers so getting a concise snapshot of your debt can be a challenge. The federal student loan portal isn’t easy to navigate, and answers may be hard to find.
What Happens If you Stop Paying?
If you’ve been struggling along with your student loans and slowly drowning, what are your options? Can you simply stop paying your debt? In a word, yes, you can stop paying any debt. You can stop paying your car note, your rent or mortgage, your utilities, and your student loans. Within a couple of months, your car will be repossessed, you’ll be evicted, and you’ll be sitting in the dark, but the impact of non-payment of student loans takes longer to hit – but can be devastating.
When you miss a student loan payment, this status is considered delinquency – it means you failed to meet the terms of your loan. The loan servicers will reach out to you and try to collect. If you don’t respond and go six months without paying, you move into a state of default. From there, federal student loan servicers can garnish 15% of your pay, go after your income tax refunds, sue you, and take other drastic steps. Plus, federal student loans have no limits, so this debt can haunt you to your grave.
How to Deal With Student Debt
Most Wilmington residents that have student loan debt have other debt. Increasingly, graduates come out of school with not only student loans but credit card debt, too. You might even rack up more credit card debt trying to deal with student loans. You may also have skimped on insurance and find you have accrued medical bills. One solution to free up room in your budget to deal with student loans is to consider bankruptcy.
Bankruptcy wipes out credit card debt, medical bills, and personal loans (that are not secured by an asset and are not student loans). But during the bankruptcy process, you can also request your lawyer file an adversary proceeding which is a separate action filed with bankruptcy to request relief of your student loans. An adversary proceeding can result in the discharge of some or all of your student loans depending on your financial circumstances, health, age, and job prospects.
To find out more about debt relief in bankruptcy, contact the Law Offices of John T. Orcutt. Call +1-919-646-2654 now for a free Wilmington bankruptcy consultation at one of our convenient locations in Raleigh, Durham, Fayetteville, Wilson, Greensboro, Garner or Wilmington.
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