With the current economic crisis that all of us are experiencing, certain problems like unpaid debts are not uncommon. Unlike before, the cost of living has skyrocketed into heights that left us all uncertain and struggling. One commonly unpaid debt is private student loan. Almost 50% of students who graduated from college owe money to private loan companies, and with the increase in the unemployment rate, some are having a hard time paying off their student loans, and some have no other choice but to file for a private student loan bankruptcy.
What is private student loan bankruptcy?
A student who fails to pay their debts after the usual grace period (which is usually six months) has elapsed. One can file for a student loan bankruptcy if he or she can prove that they are not capable of paying their debt, or that paying off the debt can cause them to live without even the bare necessities. One must prove that his or her income is not enough to pay off the loan. You can also request for an easier payment term from the court, which still shows that you are willing to settle your debts.
Tips to avoid private student loan bankruptcy:
- be more responsible when it comes to borrowing money. Know all the fees, the rates and the conditions attached to the loan before pushing through with your application. Seek the help of your guidance counselor or the school personnel assigned to explain student loans.
- find a resolution as early as possible. If you feel that you are not that successful when it comes to managing your finances, seek help as early as possible. Consider doing a private student loan consolidation, to make it easier for you to pay off your debts. Seek help from your guidance counselor, or even your parents. You should not let things get worse for you and your debts.
- live frugally and within your means. It may be a heady feeling to be able to spend your first paycheck, but it is also more practical to pay off your debts first before splurging. Manage your finances well, and make sure that you pay your monthly dues religiously, since this can also help you build a good credit score, which could be of great help for you in the future.Â
Starting off after graduating from college can be really exciting, especially when it comes to sacking that first job. But it also opens you up to the reality of life, which is clearly represented by the private student loan that you have to pay off.